Pre-retirement planning at Creative Planning helps savers within five years of retirement test an exit date, schedule income, and coordinate taxes across multiple accounts.
We examine whether your balances can support your target lifestyle before you hand in your notice.
Testing your retirement date against cash flow
Picking a retirement date works best when you test it against real expenses rather than an arbitrary age. Five years before your planned exit, we map your expected spending against non-portfolio income like pensions, then determine the gap your savings must fill.
Consider a hypothetical couple retiring at age 62 with $1,200,000 in savings and a target budget of $8,000 per month. If Social Security is delayed until their full retirement age of 67, their accounts must supply the entire $96,000 per year during that five-year bridge. A fixed withdrawal rate risks depleting capital during an early market downturn, so Creative Planning uses a guardrails withdrawal strategy that adjusts spending up or down within preset limits as asset values shift.
No investment portfolio is immune to market declines, and assets can lose value over extended stretches.
| Market condition | Portfolio balance | Adjustment rule | Monthly distribution |
|---|---|---|---|
| Target baseline | $1,200,000 | Initial 5.0% target withdrawal | $5,000 per month |
| Portfolio drops 15% | $1,020,000 | Trim spending by 8% | $4,600 per month |
| Portfolio rises 20% | $1,440,000 | Raise spending by 5% | $5,250 per month |
Can I bridge the gap before Medicare at age 65?
Leaving work before age 65 requires a concrete bridge for healthcare costs until Medicare Part B begins at $202.90 per month in 2026. Premiums under COBRA typically end after 18 months, leaving pre-retirees to purchase coverage through the public exchange or an employer retiree plan.
If you purchase exchange coverage, managing taxable distributions keeps premiums manageable. Every dollar drawn from a traditional 401(k) raises your modified adjusted gross income, directly affecting available premium tax credits.
- Check how many months of COBRA coverage your employer plan offers.
- Calculate whether keeping taxable income low unlocks healthcare exchange premium tax credits.
- Fund pre-age-65 medical outlays using dedicated cash or an HSA balance.
Using low-income years for Roth conversions
The gap between your last working paycheck and age 73 offers a rare window of reduced income. Once wages end and before required minimum distributions begin, your taxable income drops, creating an opportunity to move pre-tax dollars into a Roth IRA at lower rates.
A decision threshold we follow is straightforward: if your projected tax bracket in retirement will be higher than your current bracket during the gap years, partial Roth conversions generally make sense. Moving $40,000 per year from a traditional IRA up to the top of your current tax bracket prevents forced distributions from pushing you into higher brackets later.
Converting your 401(k) into a monthly paycheck
Replacing a paycheck involves organizing your accounts so cash arrives on a set schedule without forcing share sales during bad months. Creative Planning advisors review your company plan distribution options and evaluate whether a 401(k) rollover into an IRA provides better investment access.
We maintain two years of estimated portfolio withdrawals in liquid reserves and short-term holdings. That buffer allows your equity investments to recover without interrupting your monthly transfer.
- Verify whether your company plan permits partial distributions after age 59½.
- Direct dividends and interest into a settlement cash account rather than auto-reinvesting.
- Schedule an automatic monthly transfer to your personal checking account.
Questions people ask Creative Planning
When should pre-retirees claim Social Security?
Delaying Social Security past age 62 increases your benefit by roughly 8% for each year you wait until age 70. If your investment portfolio can fund your living expenses during the early years, waiting gives you a larger guaranteed baseline for life.
What is the minimum asset level to work with Creative Planning?
Creative Planning maintains a client minimum of $500,000 in investable assets. Advisory fees are set out in a written agreement before any work starts.
How does Creative Planning handle Medicare IRMAA surcharges?
Medicare Part B and Part D premiums use income figures from two years prior. We monitor your capital gains and Roth conversions each calendar year to avoid crossing IRMAA tiers, such as the $218,000 joint threshold in 2026.
Who We Serve
This material is for general information. It is not individualized investment, tax or legal guidance. Investing involves risk, including the possible loss of principal. Before making any financial decision, talk with a qualified professional about your specific circumstances.