Retirement planning requires understanding three major tax landmines that can derail your financial strategy: Required Minimum Distributions (RMDs), the widow's penalty, and beneficiary taxes.

• RMDs are mandatory withdrawals from tax-deferred accounts starting at age 73 (increasing to 75 in the future)
• The percentage of your account that must be withdrawn increases with age, potentially pushing you into higher tax brackets
• The "widow's penalty" refers to the compressed tax brackets when filing as single rather than married filing jointly
• Beneficiaries typically have 10 years to empty inherited retirement accounts, which can create significant tax burden
• Roth conversions during lower-income years can significantly reduce future tax obligations
• Qualified Charitable Distributions (QCDs) allow donations directly from IRAs to satisfy RMD requirements without increasing taxable income
• When passing on wealth, Roth accounts are most tax-efficient, followed by taxable accounts with stepped-up basis, with pre-tax accounts being least efficient
• Opportunistic planning during market downturns can enhance tax-saving strategies
• Taking a year-by-year approach to tax planning while maintaining awareness of these landmines can save substantial money

Read Colin's article on retirement tax landmines here.

Financial projections can be both helpful and misleading when planning your financial future. While they provide valuable insights into potential outcomes, they shouldn't be taken as literal predictions of what will happen.

• Your financial life consists of: money in, money out, growth over time, taxes, and inflation. All financial projections are just projecting these variables
• Monte Carlo simulations introduce randomness to account for market volatility and create a range of possible outcomes
• More variables in a projection create more opportunities for error, not necessarily more accuracy
• The real value comes from understanding sensitivities – which factors significantly impact your financial future
• "Probability of success" metrics can be misleading since they don't distinguish between barely succeeding and wildly succeeding
• Financial plans should include predetermined adjustment triggers or "guardrails" that specify when and how to adapt
• For retirees, projections help answer "how much can I spend?" while younger clients benefit more from simple savings calculations
• Regular updates are essential as your financial situation evolves and market conditions change
• Control what you can (savings, investment allocation, insurance) and be prepared to adjust as life unfolds
• Remember: "All models are wrong, but some models are useful"

Navigating the complexities of Social Security can feel overwhelming, but understanding the fundamentals is crucial to maximizing your retirement security. In this detailed exploration, we break down how Social Security benefits are calculated, when to claim them, and strategies for optimizing your lifetime benefits.

At its core, Social Security functions like a government pension, providing income that lasts throughout your retirement. Your benefit amount depends on two primary factors: how much you've earned and paid into the system throughout your career (specifically your 35 highest-earning years), and when you choose to begin receiving benefits. While you can start as early as 62, delaying until your full retirement age (currently 67 for most people) or even up to age 70 results in substantially higher monthly payments.

We tackle the million-dollar question: when should you claim? The answer hinges largely on life expectancy, with the break-even age hovering around 81-82 years. Live longer than that, and delaying generally pays off significantly. For married couples, the calculus becomes even more nuanced with spousal and survivor benefits entering the equation. The higher earner should consider their claiming strategy based not on their own life expectancy, but on the expected lifespan of the last surviving spouse.

Many listeners worry about Social Security's future, with the Trust Fund projected to be depleted around 2033-2035. We explain why this doesn't mean benefits will vanish – even without changes, the system would still pay about 80% of promised benefits from current payroll taxes. Historically, reforms have always protected those at or near retirement age, making "claim it while you can" strategies unnecessary for those approaching retirement.

Whether you're decades from retirement or making claiming decisions now, this episode provides the framework to understand how Social Security fits into your broader financial picture. Remember: your Social Security statement assumes you'll continue earning at your current level until full retirement age, so early retirement plans should account for potentially lower benefits than projected.

Ready to make smarter decisions about this valuable retirement resource? Listen now to gain clarity on one of retirement planning's most consequential choices, and discover why timing is everything when it comes to maximizing your Social Security benefits.