The 6 Money Moves to Make Before You Retire

0:00Tyler Gardner:Because if you do the work in advance, the day itself is anticlimactic. You wake up on that Monday, the portfolio is structured, the cash is sitting there, the beneficiaries are right, your spouse knows where everything is, your healthcare is covered. And then, you make a coffee, you walk to the window, and you realize that the calendar in front of you is genuinely, completely, fully yours. Hello friends, this is Tyler Gardner welcoming you to another episode of your Money Guide on the Side, where it is my job to simplify what seems complex, add nuance to what seems simple, and learn from and alongside some of the brightest minds in money, finance, and investing.

0:46Tyler Gardner:So let's get started and get you one step closer to where you need to be.

0:54quick note before we dive in july's pre-order incentive for my book real wealth is live and this one is for the investors who are ready to go beyond the basics pre-order this month tell me you did at tylergardner.com book and i'll send you investing 2.0 beyond the foundation a full hour video presentation on the five things every investor needs to know after they've mastered the fundamentals, yours to keep delivered to your inbox digitally in early August. And if you pre-order now, you're locked in for every monthly incentive through December 1st. Tylergardner.com slash book. Now let's get into it.

1:32Back in May, I asked all of you what you wanted me to write

1:35Tyler Gardner:about in the weekly newsletter, and over 1 ,200 of you took the survey, with 600 of you writing long, thoughtful, generous notes that I truly enjoyed sifting through for about two weeks. I am embarrassed at how much better your suggestions were than anything I had planned. But one thing came through louder than anything else. You don't need more accumulation content. You don't need another video about how to invest in your 20s, or how compound interest works, or why the index fund beats the active manager. You've heard that part. You've internalized that part. Most of you, frankly, are done with that part.

2:15Tyler Gardner:you've already accumulated, and what you actually want help with is the next chapter, the one so few people seem to be talking about. You want to know how to spend the money you just spent 40 years saving. So starting today, I'm dedicating the next five episodes of this podcast to exactly that. Five episodes, one topic each week, and we're calling it the Art of decumulation series because the technical word for drawing down your savings in retirement is decumulation. And frankly, I think it deserves more airtime than it gets. And yes, it is an art. Now the word decumulation is kind of ugly. The English language has a thousand words for accumulating and almost none for the careful, deliberate spending of what you accumulated, which is, I suspect, part of the problem we're going to spend the next month trying to solve together.

3:14We don't even have a vocabulary for the thing, so we mostly don't think about it.

3:19Tyler Gardner:Here's the roadmap for the next few weeks. This week, in part one, we're going to talk about what happens the day you stop working. The logistical setup, the accounts, the rollovers, the cash buffer, the social security decision, the spousal piece nobody talks about. This is your orientation episode. Next week in part two, we'll go over the withdrawal order, which accounts to draw from first, second, third, and why the order matters more than almost anything else you'll do in retirement. Week three for part three, we'll cover Roth conversions, RMDs, and Irma cliffs, the single most technically dense episode in the series, so I would bring a pen to that one.

4:06Tyler Gardner:Week four, part four, will cover market downturns in the drawdown years, the guardrails we'll need in place, when to draw from cash, when to draw from equities, and what counts as an actual downturn versus normal market noise. And finally, week five, part five, we'll go a little more philosophical and talk about what happens when we transition from saver to spender, the behavioral and psychological episode. how to actually give yourself permission to enjoy what you spent your life building. That's the series. Five episodes, roughly one month. Save this one and share it with someone who's facing the same set of decisions.

4:47Tyler Gardner:And before we get into it, one familiar ask. If you've enjoyed anything about this podcast, if it's proved helpful to you in any way through the art of accumulating or decumulating, please consider leaving a review on Apple or Spotify as it helps more people find the show. It helps the show grow, and it helps me know that I'm speaking and connecting with more than just my sleeping bloodhounds on the couch, which is, again, just fine with me, because that is and always will be my enough. Episode 1. The Wednesday That Changes Everything. There's a passage in Annie Dillard's The Writing Life that I have thought about constantly over the past few years, And I want to start with it before we touch a single technical thing.

5:34Tyler Gardner:Dillard writes, How we spend our days is, of course, how we spend our lives. That's the sentence. Eleven words. People quote it on Instagram all the time without realizing the implication, which is somewhat brutal when you actually sit with it. How we spend our Wednesday is eventually how we spend our life. The Wednesday is life. The Sunday is life. There is no other life happening somewhere else that the days are interrupting. The days are the thing. I bring this up because retirement, the day you stop working in particular, is the single moment in most adult lives when the truth of Dillard's sentence becomes inescapable.

6:23Tyler Gardner:For 40 years, your days have been structured by someone else. The job arrives at nine, the job leaves at five, the weekend exists because the week exists, the vacation exists because the work exists. The shape of your time has been imposed from the outside with the comforting, if kind of tragic side effect, that you have not had to design it yourself. And then one afternoon, you stand up from your desk, you collect the small handful full of personal items you've kept there for years, and all of a sudden, that structure is gone. The following Monday morning arrives, and there's no job. There's also no weekend, because there's no week.

7:06Tyler Gardner:The architecture of 40 years dissolves overnight, and what is left is a person who has, for the first time since perhaps adolescence, full sovereignty over their hours, and for many of us, no idea what to do with those hours. That's where most retirees start to struggle. Not with the money. The money is, by and large, fine. The struggle tends to be with time. And the time is the harder problem because the time problem is ultimately a self problem. Who are you when nobody's paying you to be somewhere? Today, though, we're not going to solve the self problem. We will, however, spend five episodes circling it.

7:51Tyler Gardner:Today, we're going to solve the technical problem, the part that, if you do it well, makes the self problem easier to face when it arrives. Let's say you're roughly 12 to 24 months from the day you stop working. You can see it from here. You can probably name it. You can probably name the quarter, maybe the month. you've spent the better part of three decades, maybe four, accumulating a portfolio that, by most objective measures, is the result of an enormous amount of discipline, sacrifice, and patience. You did the saving, you ignored the bad advice, you didn't panic in 08 or 2020 or any of the smaller dips in between, you stayed in your seat, the number on the screen is bigger than you ever thought it would be, and now you have the problem that you never had before.

8:38Tyler Gardner:Or you have no idea what to do on the day you stop working. You know how to save. You have a system for that. You know how to invest. You have funds picked out, accounts contributing automatically. But the act of stopping, of standing up from the desk for that last time on that Friday and waking up on that Monday morning with no employer, no paycheck, and a portfolio that is suddenly the only source of income you have, that part nobody trained you for. Your 401k administrator didn't send you a manual. The HR person who processed your paperwork was very pleasant and gave you zero practical advice for this section.

9:17Tyler Gardner:Your spouse may or may not know what's in the accounts. The cat, quite frankly, has more of a plan than you do because the cat plans to nap and the cat has been training for this moment its entire life. That's what we're solving today. The orientation episode. what needs to actually happen in the 12 months leading up to the day you stop working and in the months immediately after. Six decisions, roughly in this order. Might want to grab a pen because yes, this one is technical. This episode is brought to you by Delete Me. Here's a strange fact about my life. There are currently hundreds of people on the internet pretending to be me.

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11:22That's joindeleteme.com slash tyler20 using code tyler20. This episode is brought to you by Caldera Lab. Time for a quick confession. In high school, my AOL screen name might have been Pretty Boy Durden. That was my actual nickname because while other guys were collecting baseball cards and playing real sports, I might have been collecting skincare products and taking my appearance embarrassingly seriously. The problem back then, almost nothing was actually made for me. Everything was either borrowed from my mom's shelf or smelled like a department store had a mild panic attack. Which brings me to Caldera Lab.

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13:13Tyler Gardner:Decision one, build the cash buffer 12 months out. The single most important move you can make in the year before you retire, the one that prevents almost every avoidable mistake in the first 18 months of retirement, is to build a substantial cash buffer while you are still earning a paycheck. Here's why. The first year of retirement is the most psychologically volatile financial year of your entire life. bigger than buying your first house, bigger than having your first kid, because for the first time in 40 years, money is flowing in only one direction, out. The instinct when you watch a balance go down for the first time, knowing it might not ever come back up, is to panic.

14:01The instinct is to either go back to work or to stop spending entirely, or worst of all, to sell investments during a downturn just to be safe.

14:12Tyler Gardner:All three of those instincts are expensive. There's a concept in psychology that we've been over multiple times called loss aversion, Kahneman and Versky's research, eventually won Kahneman the Nobel Prize. The finding distilled is that human beings feel the pain of losing$100 roughly twice as intensely as they feel the pressure of gaining$100. We're not wired to be neutral about loss. We're wired to overcorrect. This is fine when you're accumulating, because the asymmetric pain of losses pushes you towards saving more, which is helpful in that phase. It is catastrophic when you are decumulating, because the same wiring now pushes you to sell exactly at the moment you should hold.

15:00Tyler Gardner:Loss aversion in retirement is a big enemy, and the enemy in any plan must be neutralized by infrastructure, not just willpower. The cash buffer is that infrastructure. It is the thing that makes the loss aversion panic stop having anywhere to land. Here's the math you need to know, and I'll keep it quick. You want, in cash equivalents, somewhere between 12 and 24 months of your projected retirement spending in a high-yield savings account or a money market fund the day you retire. If you plan to spend$80 ,000 a year, and again, this is post-tax, that's$80 ,000 to$160 ,000 in cash. You could have it sitting in Marcus, Ally, SoFi, or in money market funds inside your brokerage account like SPAXX or VMFXX.

15:51Tyler Gardner:And you could be earning 3 % to 4 %-ish, and this is liquid, boring, and perfect. Now, why 12 to 24 months and not what we usually talk about with things like emergency funds of three to six months? Because in any given calendar year, the market drops at some point. As we know, the average intra-year decline in the S &P 500 is about 14%. In three out of four of those years, the market still finishes positive, but only if you didn't sell your assets. The cash buffer is the thing that lets you not sell. It funds your life for one to two years without you having to touch your equities, which means a bad year in the market doesn't force you to lock in losses.

16:39Tyler Gardner:It just becomes weather. Now, how do you build the buffer if you don't have it now. Three sources in this order. First, redirect every dollar of new savings for the last 12 months you're working into cash instead of equities. You're done accumulating. The marginal dollar at this stage is not better invested in the market. It's better deployed as the cash cushion that lets your already invested dollars stay invested. Second, if you're getting a final year bonus, severance, payout for unused PTO, that's added to the buffer. Do not invest it, bank it. And third, you can sell down a small piece of your taxable brokerage in the year you retire when your income drops.

17:30Tyler Gardner:If you're in the 0 % long-term capital gains bracket, which, married filing jointly in 2026, means taxable income under$98 ,800, you can realize gains in a taxable account at zero federal tax. This is the single most underused move in the whole pre-retirement playbook. Most people don't know it exists. It is one of the best-kept secrets of the U.S. tax code, but it is not a secret. It is part of the code. You need to know about it. 12 to 24 months of cash, sitting safely, earning interest before you stop working. That's the foundation everything else sits on top of, no matter what you plan to do with the rest of the money.

18:12Tyler Gardner:Decision two, decide what's happening with your 401k. Now, so many of you have written to me saying, Tyler, most of your drawdown plans don't work because most of our assets are in a pre-tax 401k. Correct. Let's get into that. The day you stop working, you have three options for what happens with your employer 401k. Each has trade-offs, and I'll give you the short version of all three, and then tell you what I'd actually do. Option one, you can just leave the money where it is. Most employer plans allow former employees to keep their 401k at the plan administrator indefinitely. You don't have to move anything.

18:53Tyler Gardner:The investments stay where they are, the fund fees stay where they are, the plan administrator continues administering, and you can quietly forget the account exists for 15 years, which is in fact what many people do. The one issue here to me is usually 401k fund fees are more expensive than individual retirement account fees, and if you are not working for an employer, you usually now take on the administrator fees, which can be 0.5 to 1 % on top of the fund fees. So you can probably see what I think about this option, but many people do it. Option two, roll it into an IRA. You move the entire balance tax-free if it's a direct rollover, that's the key word, direct rollover, to an IRA.

19:41Tyler Gardner:You can do this through Fidelity, Vanguard, Schwab. Now it's no longer governed by your old employer's plan rules. You have complete control over the investments, complete control over the withdrawals, and access to roughly 12 ,000 more funds than the typical 401k menu offers. And if you like your current funds, you can usually transfer in-kind, that's the keyword, in-kind, to your new IRA and keep the funds unless they were proprietary funds from the 401k. Option three, roll it into your new employer's 401k, and that's only relevant if you're going to a new W-2 job. Not the scenario for most of you listening to this, but if it is your scenario, congratulations on the next act.

20:29Tyler Gardner:Please skip this section and meet us at decision three. What I would actually do, roll it into a traditional IRA at the same custodian where I plan to live for the rest of my financial life. Here are the reasons. First, the investment options. Most employer 401ks give you 15 to 30 funds to choose from, and a meaningful number of them have expense ratios, fees above 0.5%. Moving to an IRA at Fidelity or Vanguard, you have access to some of their funds with zero expense ratio, literally zero. At Vanguard, you have access to a total market fund like VTSAX with a 0.04 % expense ratio. The fee difference compounded over a 30-year retirement is absurd.

21:20Tyler Gardner:Next, you get consolidation. If you've accumulated 401ks at three previous employers, you now have three separate accounts, three separate websites, three separate beneficiary forms three separate statements. Rolling them all into one IRA eliminates the cognitive overhead and dramatically reduces the chances that something gets lost. This matters way more than people think. The number of orphaned 401ks in this country, accounts whose owners have simply forgotten they exist, ready for this, is in the trillions. Trillions, with a T, do not contribute another account to that pile. Next, required minimum distributions.

22:05Tyler Gardner:When RMDs kick in at age 73 or 75, depending on how old you are now, they're calculated separately for each retirement account. One IRA for you equals one calculation. Three IRAs, three calculations. Trust me when I'd say you'd rather have one. Finally, beneficiary control. IRA beneficiary forms tend to be cleaner and easier to update than 401k ones. We'll come back to this. Now, the one major exception to always roll it into an IRA is the rule of 55. And you need to know about this exception. If you're leaving your job in the year you turn 55 or later, your existing 401k, the one at the employer you're leaving from gives you penalty-free access to those funds before age 59 and a half.

23:02Tyler Gardner:But if you roll that 401k into an IRA on day one, you lose the rule of 55 access forever. So if you're 55 to 59 and a half when you retire and you might need to tap that money before 59 nine and a half, do not roll it. Leave it at the plan administrator. Keep the optionality because optionality in finance is almost always worth the small price of an administrative inconvenience. For everyone else, although this is not advice, it's as close as I get to giving you a one size fits all, I would roll it to an IRA at Fidelity Vanguard or Schwab. Same day, ideally, don't let it sit and get forgotten, and don't let your assets get eaten alive by fees you no longer need to pay.

23:52Tyler Gardner:Now, how do you actually do this? Always call the receiving custodian, Fidelity, Vanguard, Schwab, and you tell them you want to initiate a direct rollover from your previous employer's 401k. They handle the paperwork, they contact the old plan administrator, the money moves directly between the institutions. You never touch it, which is critical, because if you accidentally take a distribution, the IRS will treat it as a taxable event, your old employer will withhold 20 % for taxes, and you will have 60 days to redeposit that money in a new IRA or 401k, or you're going to face additional penalties as well.

24:38Long sentence in short, do a direct rollover and never touch the dang money. This episode is brought to you by FACET. If you know who Frank the Tank is, and your idea of a nice little Saturday involves Home Depot, some wallpaper, maybe flooring, this one is for you. There are three things your percentage-based financial advisor is hoping you never think about, and I know this because I've been a percentage-based financial advisor. Number one, it is not twice as hard to manage$2 million as it is to manage$1 million. Same asset allocation, same phone calls asking how the kids are doing, exactly twice the fee.

25:18Someone please make that make sense. Number two, that line they fed you, the we do better when you do better, sounds great until you realize the fastest way for them to do better is to put you in riskier assets than you wanted or needed. Your risk tolerance and their incentive structure have never been properly introduced. And number three, notice how they never tell you the fee in dollars, only the percentage. Same reason casinos take your cash and give you chips. Once it's not in dollars, it doesn't feel like dollars. Ask your advisor what 1 % costs you annually in actual dollars. See how they respond.

25:56I'll wait. Facet works differently. One flat annual membership fee, no percentage, no commissions, no casino chips, just a dedicated team of CFP professionals who help you figure out what you want your money to say about your life. Book your intro call at facet.com slash Tyler, and you'll still have time for a quick visit to Bed Bath & Beyond. Facet is an SEC-registered investment advisor. This is not advice. All opinions are my own and not a guarantee of a similar outcome. I'm not a member of Facet. I have an incentive to endorse FACET as I have an ongoing fee-based contract for cash compensation, as well as a percentage of equity in FACET based on this endorsement.

26:37This week's episode is brought to you by Gelt. Most of you listening probably already work with someone for taxes, but if you're a solopreneur, a real estate investor, or a high net worth individual whose CPA has somehow gone completely radio silence since April, this is for you. A great CPA gets in touch with you. They call in July. They ask if you've thought about something. They don't wait until March to react to a bill that was already written. The moves that actually reduce your tax burden don't happen in March. They happen now. PTE elections, S-corp timing, K-1 cleanup, prior year retirement contributions.