by Owen Malcolm, CFP® from Apollon Peachtree Corners
Key Takeaways
- Your money may work differently as you transition from building wealth to protecting what you’ve built
- Smart derisking often doesn’t mean abandoning growth—your money may still benefit from outpacing inflation for decades
- Tax diversification across different account types could provide flexibility and options in retirement
- This transition period is often when complexity peaks, which may make professional guidance valuable
- Small adjustments now could potentially impact your retirement security later
If you’re like most people approaching retirement, you’ve spent decades focused on one primary goal: saving as much as possible. You’ve maxed out your 401(k), saved money in other investment accounts, lived below your means, and watched your nest egg grow.
Now, with retirement about 15 years away, you may be facing a new reality. The simple “save everything you can” strategy that got you here might not be enough to get you there.
This shift from accumulation to transition can feel overwhelming. You’re busier than ever with work and family responsibilities, yet the financial decisions you need to make are becoming more complex. Understanding what’s ahead may help you navigate this critical period with greater confidence.
Your Money Enters a New Phase
Think of your financial journey in three distinct chapters, each with its own priorities and strategies.
Building wealth (your 20s through early 50s): Your focus was often growth. You prioritized aggressive savings, reinvested dividends, and maintained higher equity allocations. This phase was typically about accumulating as much as possible.
Transitioning to retirement (your 50s and early 60s): This is where you may be now. Your money could benefit from shifting from pure growth mode to a more balanced approach that protects what you’ve built while still growing to support decades of retirement. You might also consider important decisions about Social Security timing and begin building cash reserves.
Living in retirement (mid-60s and beyond): Your focus often shifts to maintaining purchasing power and generating reliable income while balancing your personal spending with any legacy goals you have.
Understanding which phase you’re in could help explain why your financial strategy may benefit from evolving. The aggressive growth approach that served you well in your 30s and 40s might expose you to unnecessary risk now that you’re closer to needing this money.
Why You Shouldn’t Derisk Too Much
As you approach retirement, reducing risk often makes sense. But here’s where many people make a costly mistake: they derisk too aggressively, moving too much money into cash or overly conservative investments.
Your retirement could last 30 years or more. During that time, inflation may continue to erode purchasing power. If you’re too conservative now, you might risk not having enough money to maintain your lifestyle later in retirement.
The right derisking approach often depends on your specific goals. If you’re planning to leave wealth to your children, your investment timeline extends beyond your lifetime. This longer horizon could mean you can maintain more growth-oriented investments. If your primary focus is funding your own retirement years, you might want to consider taking more risk off the table.
This is exactly the type of decision that can keep people up at night. You want to protect what you’ve worked so hard to build, but you also don’t want to be too conservative and run out of money later. The answer often isn’t found in a one-size-fits-all approach—it may require understanding your unique situation and goals.
Tax Diversification: Your Future Flexibility
Most people focus on investment diversification, but tax diversification may be equally important. The types of accounts you fund now could determine your flexibility and tax burden in retirement.
Tax-exempt accounts (Roth IRA, Roth 401(k), HSA): You pay taxes now, but qualified withdrawals are tax-free. These accounts may be particularly valuable if you expect to be in a similar or higher tax bracket in retirement.
Tax-deferred accounts (Traditional 401(k), Traditional IRA): You get a tax deduction now, but withdrawals are taxed as ordinary income. This could make sense if you expect to be in a lower tax bracket in retirement.
Taxable accounts (brokerage accounts, CDs): No tax advantages for contributions, but you have complete flexibility with no withdrawal penalties or required distributions.
Having money in all three types of accounts may provide the flexibility to manage your tax burden in retirement. You could potentially choose which accounts to withdraw from based on your tax situation each year.
Why This Transition Period Matters
Here’s the reality: the 15 years before retirement are when your financial picture becomes most complex. You’re dealing with peak earnings, potential executive compensation, family financial support, and increasingly sophisticated investment and tax strategies. At the same time, you’re busier than ever with career and family responsibilities.
This complexity is exactly why many successful people find themselves feeling anxious about their retirement planning during this period. You’ve done well on your own, but the decisions ahead require expertise in areas you may not have encountered before.
The weight of making the wrong choice can feel overwhelming. Should you convert some traditional IRA money to a Roth? How should you handle stock compensation? What’s the optimal Social Security claiming strategy? These aren’t simple questions with obvious answers.
Moving Forward with Confidence
If you’re feeling the weight of these complex retirement planning decisions, remember that you don’t have to figure this out alone. The transition from wealth accumulation to retirement distribution is a specialized area that benefits from professional guidance.
Your Apollon Peachtree Corners team understands the unique challenges you’re facing during this critical period. We work with clients exactly like you—successful professionals who have done well on their own but recognize that the path ahead requires specialized knowledge and ongoing support.
For clients: If recent market volatility or upcoming retirement decisions are causing you concern, don’t hesitate to reach out. We’re here to help you stay on track and make adjustments as needed.
New to our team? Welcome! Thank you for reading this newsletter. If you’re feeling overwhelmed by the complexity of retirement planning, you’re not alone. Schedule your complimentary “Retirement De- Stress Starter” consultation today. In this 60-minute conversation, we’ll help you understand exactly where you stand and create a clear path forward. You don’t have to carry the weight of these decisions alone.
Schedule your Retirement De-Stress Starter or connect with our team on LinkedIn to learn more about how we help successful professionals transition confidently into retirement.
by Owen Malcolm, CFP® from Apollon Peachtree Corners
Apollon Wealth Management, LLC (“Apollon”) provides advice and makes recommendations based on the specific needs and circumstances of each client. For clients with managed accounts, Apollon has discretionary authority over investment decisions. Investing involves risk, and clients should carefully consider their own investment objectives. No single chart, graph, or marketing material should be relied upon to make investment decisions. The information contained herein is for informational purposes only, is not a recommendation to buy or sell any security, and should not be considered tax, legal, or personalized investment advice. Past performance is no guarantee of future results. Please consult your financial advisor regarding your specific needs and circumstances.
