Latest / TaylorMade Retirement with Taylor Demars, CFP® / If I Started Planning For Retirement in 2026, I'd Do This

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If I Started Planning For Retirement in 2026, I'd Do This · TaylorMade Retirement with Taylor Demars, CFP®

• 0:00
  SPEAKER_01: Today's content is pulled from Taylor's YouTube channel.
• 0:04
  SPEAKER_01: If you want to watch the video version or catch more great content, subscribe by clicking the link in today's show description.
• 0:13
  SPEAKER_01: Welcome to Taylor Made Retirement, where we explore what it takes to build a retirement that works for your money and your life with third generation certified financial planner Taylor DeMars.
• 0:28
  SPEAKER_00: If I were starting my retirement planning from scratch in 2026 with two to five million saved and retirement less than five years away, I wouldn't start by doing what most people do.
• 0:38
  SPEAKER_00: I wouldn't open a retirement calculator, plug in my portfolio, and let a number tell me whether I'm ready.
• 0:44
  SPEAKER_00: I also wouldn't Google how much do I need to retire and base the next 30 years of my life based on generic rules that know nothing about my taxes, spending, social security, or investments.
• 0:54
  SPEAKER_00: And I definitely wouldn't assume that just because I spent decades building wealth, I automatically know the best way to start using it going forward.
• 1:02
  SPEAKER_00: Because when you get this close to retirement, you can't just settle for just asking, do I have enough?
• 1:08
  SPEAKER_00: That answer is only as useful as the assumptions behind it.
• 1:11
  SPEAKER_00: Assumptions like, what are you actually asking this money to make possible?
• 1:14
  SPEAKER_00: How much of your lifestyle does your portfolio really need to fund?
• 1:17
  SPEAKER_00: And once you know those things, how should your investments, income, and tax strategy work together to support it?
• 1:23
  SPEAKER_00: Gets clear because none of those decisions happen in isolation.
• 1:27
  SPEAKER_00: Each one changes the assumptions behind the next.
• 1:30
  SPEAKER_00: I'm Taylor Demars, certified financial planner and tax strategist.
• 1:33
  SPEAKER_00: And if I were building my own retirement plan from scratch, there are four things I would walk through in a certain sequence.
• 1:40
  SPEAKER_00: And the order matters because most people jump straight to implementation, asking things like, how should you invest?
• 1:46
  SPEAKER_00: What should you convert?
• 1:48
  SPEAKER_00: When should you claim Social Security?
• 1:50
  SPEAKER_00: But I think all of those things start one step too late.
• 1:53
  SPEAKER_00: Because before you build the portfolio, you need a plan.
• 1:57
  SPEAKER_00: And before you need the plan, you need to understand the purpose behind the dollars you've saved up to get to this point.
• 2:02
  SPEAKER_00: And that is where I would start.
• 2:06
  SPEAKER_00: The first thing I would do is figure out what I actually want retirement to look like.
• 2:11
  SPEAKER_00: And I don't mean just opening a spreadsheet looking at what I spent last year.
• 2:14
  SPEAKER_00: That can be useful, but I don't think it's the best place to start.
• 2:18
  SPEAKER_00: One of the things I've noticed working with people who have been good savers for 30 plus years is that it can be surprisingly hard to just switch that part of your brain off.
• 2:27
  SPEAKER_00: You've spent your entire career living within your means, saving consistently, investing, avoiding unnecessary lifestyle creep, and just making responsible decisions with that money.
• 2:38
  SPEAKER_00: Now, when retirement gets close, almost overnight someone asks you, okay, tell me how much you want to spend.
• 2:44
  SPEAKER_00: And then most people default to just doing what they already know, saying, Well, this is what I spend now, so I guess that's what I'll spend in retirement.
• 2:52
  SPEAKER_00: And maybe that turns out to be the case, but I'd rather test that assumption than just implement it without thinking twice.
• 2:58
  SPEAKER_00: So to figure that out, one of the first questions I like to ask clients is, if money were no object, what would you actually want to do?
• 3:05
  SPEAKER_00: I ask that because I'd rather start with your ideal retirement lifestyle and work backwards rather than start small and limit the possibilities that we may not even know are possible.
• 3:15
  SPEAKER_00: You know what's funny is I almost never hear anybody answer that question with anything crazy like, oh, go start buying yachts, living on private islands, or blowing it all in Vegas.
• 3:25
  SPEAKER_00: I usually hear people respond by talking about things that they've quietly wanted to do for years, but never gave themselves permission to consider.
• 3:32
  SPEAKER_00: For example, I've heard clients talk about taking the entire family on a vacation to the U.S.
• 3:37
  SPEAKER_00: Virgin Islands and picking up the bill so no one has to worry about whether they can afford to come.
• 3:42
  SPEAKER_00: I was so proud of my grandpa earlier this year who bought a 1949 Ford, the same car that he had saved up to buy when he was washing cars as a teenager.
• 3:51
  SPEAKER_00: And currently, we're helping a client bring to life a quiet waterfront forever home with a pool that they never thought was possible.
• 3:58
  SPEAKER_00: The specifics can change from family to family, but this theme doesn't, which is the money is supposed to buy you something, often time, freedom, experiences, maybe it's the ability to help your kids, or just the ability to stop waking up on Monday morning and wishing it was Friday.
• 4:15
  SPEAKER_00: So before I worry about whether a plant has a reasonable Monte Carlo score, I want to know what we're actually asking it to pay for.
• 4:22
  SPEAKER_00: And I even find it helpful to take that conversation a little further and ask someone to imagine if they had bad news, saying, the bad news is you have five years, maybe ten years, good years left to live.
• 4:32
  SPEAKER_00: And that suddenly lifts off the blinders and asking themselves, what would suddenly become more important?
• 4:38
  SPEAKER_00: What would you actually stop putting off?
• 4:40
  SPEAKER_00: Or even what might you regret not doing going forward?
• 4:43
  SPEAKER_00: Money isn't the only finite source in a retirement plan.
• 4:47
  SPEAKER_00: Your healthy years are that as well.
• 4:49
  SPEAKER_00: And that means that there's risks on both sides of this equation.
• 4:53
  SPEAKER_00: Meaning on the one side, yeah, you can retire too early, spend too much, and put yourself in a pinch, to say the least, financially later on.
• 5:00
  SPEAKER_00: But you can also work longer than you needed to, save more money that you may never use, and then reach your late 70s with a healthy portfolio, but also have a list of the things that you no longer have the health or energy to do.
• 5:12
  SPEAKER_00: Neither side feels like success to me.
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  SPEAKER_00: So after establishing that ideal lifestyle you want, then we can start putting real numbers around it.
• 5:20
  SPEAKER_00: And we wouldn't treat all of it like one giant recurring number.
• 5:23
  SPEAKER_00: There are usually some base categories like the needs, your daily utilities, housing, food, et cetera, the things that keep normal life moving along.
• 5:31
  SPEAKER_00: And then you got your wants, things like the travel, the hobbies, and the things that you want to spend more of your time on in the healthier years of retirement.
• 5:39
  SPEAKER_00: And then you might consider some of those wishes.
• 5:41
  SPEAKER_00: Might be things like helping your kids, replacing vehicles with nicer options or more frequently than you thought, or finally tackling that big home project that you never gave yourself permission to consider.
• 5:51
  SPEAKER_00: These three categories all behave differently in a retirement plan.
• 5:54
  SPEAKER_00: And I would rather put all my needs, wants, and wishes into the plan on the first try, even if it tells me I can't do everything, then leave some of those wishes or even wants out, get a beautiful projection on paper, and only years down the road discover that the only reason that the plan worked is because it modeled a retirement that I never considered to be ideal.
• 6:13
  SPEAKER_00: So that's the first assumption that I would want to get right.
• 6:16
  SPEAKER_00: Because once I know what I'm trying to fund, then I can finally answer the next question, which asks, how much of that does my portfolio really need to provide?
• 6:24
  SPEAKER_00: Because people can look at a$3 million or$4 million portfolio and say, this money has to fund all of my retirement expenses for the next three decades.
• 6:33
  SPEAKER_00: But in most cases, that actually isn't the job because your portfolio may be, yes, one of the largest pieces of the plan.
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  SPEAKER_00: It isn't the only one.
• 6:41
  SPEAKER_00: At some point, Social Security may cover part of your spending.
• 6:44
  SPEAKER_00: Maybe you have a pension or an annuity.
• 6:46
  SPEAKER_00: Maybe one spouse is going to keep working for a few more years than you, or you yourself might be doing some consulting after leaving your full-time job because maybe you just enjoy it or need something of structure in your schedule.
• 6:57
  SPEAKER_00: Each of these factors can change how much work the investment portfolio itself has to carry.
• 7:02
  SPEAKER_00: So if we presume that that ideal retirement lifestyle we talked about costs$180,000 a year, I'm not jumping to say, can that$4 million support$180,000 a year for the rest of our lives?
• 7:14
  SPEAKER_00: Because first, I want to know what income is going to show up without us having to first sell investments to create it.
• 7:20
  SPEAKER_00: Suppose that once Social Security and maybe another reliable income source begin, they're going to cover$70,000 of that$180,000 lifestyle.
• 7:28
  SPEAKER_00: The job drops from$180,000 to something closer to maybe$110,000 gap.
• 7:34
  SPEAKER_00: And that isn't a static number because maybe you retire at 59, so the portfolio needs to carry a heavier burden because of higher health insurance premiums and maybe the go-go years that you're excited to take the most advantage of.
• 7:46
  SPEAKER_00: Not too long after, Social Security might start.
• 7:48
  SPEAKER_00: Maybe you have a pension.
• 7:49
  SPEAKER_00: And eventually, if you have a mortgage, that's going to disappear.
• 7:52
  SPEAKER_00: And maybe some of your other larger spending goals fall away.
• 7:55
  SPEAKER_00: The job of the portfolio at 59 years old can look very different from the job it has to fulfill at 69 years old.
• 8:01
  SPEAKER_00: I see people make mistakes in both of these directions where they might mentally assign their entire lifestyle to their investment portfolio, make a balance sheet feel like it's a lot shakier than it actually is.
• 8:12
  SPEAKER_00: Other people might look at a large portfolio and feel really wealthy without appreciating how much pressure those first or five, six years might put on the portfolio.
• 8:21
  SPEAKER_00: I don't really care too much about the portfolio balance in isolation.
• 8:25
  SPEAKER_00: Instead, what matters more is the relationship between what you want to spend and what income is coming from other areas, and then what the gap is that your investments need to fill in between.
• 8:35
  SPEAKER_00: Of course, objectively, your nested is a significant pile of money, and turning that pile into a paycheck takes decisions, which account gets tapped first, what gets sold when the market is down, and how you can make your income feel steady even when the account balance doesn't.
• 8:51
  SPEAKER_00: Most people usually leave these kind of decisions to the whims of the market, but what they don't realize is the market usually makes them for them in a downturn.
• 8:58
  SPEAKER_00: So that leads us to the third step.
• 8:59
  SPEAKER_00: And in fact, if you want to see what this looks like when all these decisions are working together, I put together a sample financial plan that shows you exactly that.
• 9:07
  SPEAKER_00: It'll give you a look at how spending, income, investments, taxes, and your retirement timing can come together in a coordinated plan.
• 9:15
  SPEAKER_00: You can grab your copy through a link in the description.
• 9:19
  SPEAKER_00: I'll give you a real example.
• 9:20
  SPEAKER_00: Earlier this year, I had a client ask me a version of a question I hear all the time, something to the tune of, should I have my portfolio set up as a 6040 or a 7030 in retirement?
• 9:31
  SPEAKER_00: Which is a perfectly reasonable question, but it skips a step because before I can tell anyone what mix of assets that they should hold between, say stocks and bonds, I need to know when each dollar is getting spent.
• 9:42
  SPEAKER_00: This client who asked me the question had his number.
• 9:45
  SPEAKER_00: So we then sorted his money by when he needed it instead of how old he was.
• 9:50
  SPEAKER_00: Money need to be allocated for the next year, then for the next several years, and even money that he may not touch for five, 10 plus years.
• 9:58
  SPEAKER_00: Different dollars deserve different jobs inside of the same portfolio.
• 10:02
  SPEAKER_00: For our clients, we want to set up a first layer of funds we refer to as the pantry.
• 10:06
  SPEAKER_00: Dollars that are at their fingertips, ready for a rainy day.
• 10:09
  SPEAKER_00: Then we set up their bond bunker, which is projected to be five years worth of withdrawal needs.
• 10:13
  SPEAKER_00: Notice I didn't say five years worth of lifestyle needs because of that gap between what their other income sources might be and what the portfolio needs to take up.
• 10:22
  SPEAKER_00: That bond bunker allows us to know that the market storms, when they come, we have a safe haven to be able to rely on for regular income.
• 10:29
  SPEAKER_00: And then the rest of their assets we can plan on for the long term so that we don't feel that we have to sell anything off on a pinch just because we need to pay for our groceries.
• 10:37
  SPEAKER_00: What I like about building the plan this way is that the portfolio allocation becomes an output from the plan rather than a starting point.
• 10:44
  SPEAKER_00: We don't start by telling someone you're retired, therefore let's default to a 60-40 stock-to-bond allocation.
• 10:49
  SPEAKER_00: We need to figure out first exactly how much stability a client needs, do the math.
• 10:53
  SPEAKER_00: And in this client's case that asked me earlier this year, his portfolio landed much closer to an 80-20.
• 10:59
  SPEAKER_00: Of course, that doesn't mean that an 80-20 is the right answer for you.
• 11:02
  SPEAKER_00: His allocation came not from a cookie-cutter approach, but a tailored strategy meant for the job that his money needed to do.
• 11:08
  SPEAKER_00: Once people see it this way, every piece of the portfolio has a job, and then it makes the daily ups and downs of the market matter a lot less.
• 11:16
  SPEAKER_00: That distinction becomes much more important in retirement than I think most people give it credit.
• 11:20
  SPEAKER_00: Because while you're working, a bad market year is uncomfortable to say the least, but you still have a paycheck landing in the bank account every few weeks.
• 11:28
  SPEAKER_00: Once you retire, your portfolio needs to become your paycheck.
• 11:31
  SPEAKER_00: And that changes the experience entirely.
• 11:34
  SPEAKER_00: I want you to know where this next month's money is coming from.
• 11:37
  SPEAKER_00: If you decide to take that big family trip we talked about earlier, I want to know which dollars are funding it.
• 11:43
  SPEAKER_00: And if the market has an awful year, you don't need to feel like you have to cancel retirement because CNBC is flashing morning lights.
• 11:52
  SPEAKER_00: There's a big psychological difference between seeing a projection that says you can spend 12 grand a month and actually understanding how that 12 grand is going to show up in your bank account.
• 12:01
  SPEAKER_00: That's why I think of this as building a portfolio to paycheck system.
• 12:05
  SPEAKER_00: But once we start deciding where those withdrawals are going to come from, another issue starts coming up right away.
• 12:11
  SPEAKER_00: Taxes.
• 12:11
  SPEAKER_00: And this is where I see some very financially sophisticated people accidentally start optimizing the wrong thing.
• 12:17
  SPEAKER_00: And don't get me wrong, I'm not here to overpay and much less tip the IRS.
• 12:21
  SPEAKER_00: If there's a legitimate opportunity, though, to pay less taxes over your lifetime, I'm absolutely here to explore it.
• 12:28
  SPEAKER_00: The problem is we don't want to let the tax tail wag in the retirement dog.
• 12:31
  SPEAKER_00: Suppose you're retiring before Medicare, yet you're trying to keep your income below a certain level, because that means you might be able to save a meaningful amount on government marketplace health insurance.
• 12:41
  SPEAKER_00: That could be a great strategy.
• 12:43
  SPEAKER_00: But that same income number may also be affected by how much you spend, what accounts you withdraw from, and whether you're doing something like a Roth conversion.
• 12:51
  SPEAKER_00: And all of these compete for the same space on your tax return.
• 12:54
  SPEAKER_00: So if we become so focused on preserving a healthcare subsidy or maybe even maximizing a Roth conversion, that we start suppressing the lifestyle that you built decades to enjoy, I think we need to stop and ask what we're truly optimizing.
• 13:08
  SPEAKER_00: I've seen firsthand why this order matters.
• 13:11
  SPEAKER_00: I've worked with clients who came into the planning process wanting to know exactly how much they should convert in Roth, but once we corrected the assumptions on how much they wanted to spend and how much income they would still be earning, a lot of the Roth conversion room they thought they had actually wasn't there anymore.
• 13:26
  SPEAKER_00: And that's not a bad thing.
• 13:27
  SPEAKER_00: I would rather craft the ideal of a retirement lifestyle first and then see what areas there are to optimize from a tax point on top of it.
• 13:34
  SPEAKER_00: Because believe it or not, I've seen how you can execute a tax strategy perfectly, but still make your entire retirement plan even worse.
• 13:41
  SPEAKER_00: By this point, only after I've worked through all of that would I open the retirement planning software and be able to ask, hey, does this actually work?
• 13:48
  SPEAKER_00: And we wait until this point for a reason.
• 13:50
  SPEAKER_00: Retirement planning software can look sophisticated.
• 13:52
  SPEAKER_00: It runs thousands of market scenarios, modeling things such as inflation, estimating ups and downs of the stock market, estimated longevity, and eventually, with all those inputs, eventually spit out a probability of success that feels very precise, almost too precise.
• 14:08
  SPEAKER_00: Because if the assumptions underneath it are all wrong, all we've done is become very precise about the wrong answer.
• 14:14
  SPEAKER_00: Worst case scenario, we're putting garbage in to get garbage out.
• 14:17
  SPEAKER_00: And if, say, the spending assumption is wrong, if we forgot an income source, if we've assumed a lifestyle that you don't actually want to live, or if the tax strategy underneath the plan isn't realistic, then running thousands of simulations doesn't fix any of that.
• 14:30
  SPEAKER_00: And unfortunately, this is where I see too many people getting overly fixed on the Monte Carlo score itself.
• 14:35
  SPEAKER_00: For example, I had a client earlier this year who had a retirement plan that was showing a 79% probability of success.
• 14:41
  SPEAKER_00: They essentially told himself, phooey, I can't retire yet.
• 14:44
  SPEAKER_00: But if that number suddenly got to 80%, he would have felt like he overnight had the permission to do so.
• 14:49
  SPEAKER_00: But you gotta ask yourself, what actually changed from one percentage point to another?
• 14:54
  SPEAKER_00: Did retirement suddenly become a good idea because a software moved one digit?
• 14:58
  SPEAKER_00: Of course not.
• 14:59
  SPEAKER_00: Because if my only goal were to make that number look prettier, I could probably tweak an assumption or two and make it move the way that we want.
• 15:06
  SPEAKER_00: And while the software on paper would look happier, I wouldn't say that the plan itself would be happier.
• 15:11
  SPEAKER_00: What I care about is whether we started with reasonable assumptions, whether the plan sits in a reasonable range, and what the plan is to do when reality drifts off course.
• 15:21
  SPEAKER_00: Because one thing I do know is that the projections will look different.
• 15:25
  SPEAKER_00: Things in and out of our control will change.
• 15:27
  SPEAKER_00: Maybe the market has a rough first few years.
• 15:30
  SPEAKER_00: Maybe you start spending more because the kids start having grandchildren, and now you're traveling across the country more often.
• 15:36
  SPEAKER_00: Maybe you're spending less, tax law changes all the time, and maybe a few years into retirement, you actually start to look at the house and say, hey, maybe we need to move out of here into something larger or smaller.
• 15:48
  SPEAKER_00: And maybe five years into retirement, you decide that the house you said you would never buy actually starts to look kind of appealing.
• 15:53
  SPEAKER_00: And this is what planning for real life looks like rather than just assuming it sticks to a spreadsheet.
• 15:59
  SPEAKER_00: Because it's reasonable to assume there will be some need to course correction over the next 30 years.
• 16:04
  SPEAKER_00: And what you owe to yourself is what and where those adjustment levers to keep on course are.
• 16:09
  SPEAKER_00: Because if things start drifting, you might ask yourself, maybe we do we push back a major purchase back a year?
• 16:15
  SPEAKER_00: Or do we temporarily reduce discretionary spending?
• 16:18
  SPEAKER_00: Do we need to start changing which accounts we're drawing from?
• 16:21
  SPEAKER_00: Maybe the portfolio allocation as a whole needs to be adjusted.
• 16:24
  SPEAKER_00: I would rather think through those decisions while things are going well rather than invent them for the first time during the middle of a bad market.
• 16:31
  SPEAKER_00: A good retirement plan should have those adjustment levers built into the thinking from the beginning.
• 16:37
  SPEAKER_00: I like to think of it like a flight plan.
• 16:39
  SPEAKER_00: You want to establish where you're going and then the route that you expect to take, and of course making those small tweaks of a course correction as conditions change.
• 16:47
  SPEAKER_00: At 58 or 59 years old, I'm not trying to perfectly predict the next 30 years of your life because we both know I can't.
• 16:54
  SPEAKER_00: But what I can do is make sure that we're starting with assumptions that we're taking seriously, get the plan enough margin to absorb things that we can't predict, and understand what adjustments we're willing to make if things begin to move off course.
• 17:07
  SPEAKER_00: That ongoing maintenance matters a lot more to me than obsessing about whether today's Monte Carlo score says 79%, 80%, or 83%.
• 17:16
  SPEAKER_00: So the question I want answered isn't whether 3 million or 5 million is enough in isolation to retire.
• 17:22
  SPEAKER_00: It's whether the dollars you've built can actually support the life that you actually want through a plan whose assumptions you understand and all the moving pieces actually work together.
• 17:32
  SPEAKER_00: If you want a plan like this built for you, the first link in the description books a call with me, and we'll start exactly where this video started.
• 17:39
  SPEAKER_00: Understanding what your money is for, not with a spreadsheet.
• 17:42
  SPEAKER_00: And if you rather see the finished product of what a plan looks like, the other link in the description is a full sample plan built on the same three-month, seventh session retirement readiness roadmap we build with clients.
• 17:52
  SPEAKER_00: Because ultimately, I don't think your goal is to reach retirement with the highest possible account balance or even the prettiest projection.
• 17:59
  SPEAKER_00: Instead, the goal is to know what you've built the money for and to have confidence in the plan that you're actually willing to go and live it.
• 18:05
  SPEAKER_00: And if you're trying to weigh whether a few more years is worth it until you retire, I made a video right here that talks about the truth about the difference between retiring at 55 and 65.
• 18:15
  SPEAKER_00: You can click on it now, and I'll see you there.