19 Unsexy Habits That Lead to a Great Retirement

Free retirement training for people within 10 years of retirement and $1M+ saved. Watch “The Sequoia System Training” here: https://learn.rootfinancial.com/ad021b

=======================
I've spent 15 years watching retirees blow up decades of saving with decisions that felt harmless in the moment. Not big mistakes. Small ones, repeated for years, that quietly cost people hundreds of thousands of dollars.

The retirees who actually get it right aren't the smartest investors or the biggest savers. They just do the same boring things, over and over, starting years before anyone tells them to.

This video is 19 of those habits, in the order that actually matters.

We're going to cover:

- the "tax torpedo" that turns a 12% withdrawal into a 22% one, and why almost nobody checks for it before pulling from their IRA
- why I tell clients to start living on their retirement number a full year before they retire, and what usually happens when they try
- the marathon analogy that explains why the biggest Roth conversion mistake isn't doing one, it's doing it all at once
- the letter I tell every client to write for their spouse, and why not writing it is one of the cruelest things you can leave behind
- the trip booking trick that costs you nothing and forces your family to actually follow through
- the conversation with your adult children, or your parents, that most people avoid until it's too late

--

Advisory services are offered through Root Financial Partners, LLC, an SEC-registered investment adviser. This content is intended for informational and educational purposes only and should not be considered personalized investment, tax, or legal advice. Viewing this content does not create an advisory relationship. We do not provide tax preparation or legal services. Always consult an investment, tax or legal professional regarding your specific situation.

The strategies, case studies, and examples discussed may not be suitable for everyone. They are hypothetical and for illustrative and educational purposes only. They do not reflect actual client results and are not guarantees of future performance. All investments involve risk, including the potential loss of principal.

Comments reflect the views of individual users and do not necessarily represent the views of Root Financial. They are not verified, may not be accurate, and should not be considered testimonials or endorsements

Participation in the Retirement Planning Academy or Early Retirement Academy does not create an advisory relationship with Root Financial. These programs are educational in nature and are not a substitute for personalized financial advice. Advisory services are offered only under a written agreement with Root Financial.

Create Your Custom Strategy ⬇️

Get Started Here.

Join the new Root Collective HERE!

Transcript

Boring Habits Overview

SPEAKER_00 0:00

In my 15 years as a retirement advisor, I've noticed a pattern. The most successful retirees have one thing in common that most people never learn about. You'd think they were amazing savers, or got lucky in business, or were great at investing. But the truth is, they got there through a series of really boring, stupidly simple habits that they carried with them through the years. The sad part is nobody talks about these habits. These are so simple that anybody could do these, but most people don't know they should be. In this video, I'm gonna share with you 19 of these boring habits so you can start sooner rather than later. And trust me, you'll thank me later. Let's get into it. Now, none of these habits are complicated, but that's the beauty of it. What you want to make sure you're doing is you want to start earlier than feels necessary and you want to carry these with you throughout your retirement. I'm gonna start with the habits that are most impactful and then close with the habits that matter most to your family. Let's

1. Social Security Tax Torpedo

SPEAKER_00 0:51

jump in. Habit number one, check your provisional income before pulling out more from your portfolio. Here's what I mean by this provisional income is the way that the IRS determines how much money you owe in taxes on your social security benefit. Here's where people go wrong. They're retired, they're living off their income, and they see that maybe they're in the 12% tax bracket. So they're gonna pull another dollar from their IRA because they say that's not gonna cost us that much in taxes or in the 12% tax bracket. But little did they know, not only is that one more dollar that's being pulled into their income that's taxed at 12%, it's also pulling more of their social security benefit into the income that gets taxed. So not all of your social security benefit is taxed. Anywhere between 0 and 85% of it gets included in the income that you pay taxes on. So when you're pulling money through this zone that's called the Social Security Tax Torpedo, every additional dollar that you pull seems like it's only gonna cost you 12 cents at the federal level, but it's actually costing you closer to 22 cents. Because yes, that one dollar is taxed at 12%, but it's also pulling 85 cents of your social security that wasn't previously being taxed into your taxable income. So make sure that you're checking that. It's those little decisions, that boring habit that if you do this year after year, will make sure that you're not eroding money unnecessarily to taxes that could have been

2. Test Drive Retirement Spending

SPEAKER_00 2:06

avoided. Habit number two, learn to live on your projected retirement income before you actually retire. I can't tell you how many people have a number they think they're gonna spend in retirement, but it's nowhere close to what they actually spend. How do you test that? Well, you live it. If you're a year out from retirement and you think that you're gonna spend $10,000 per month in retirement, here's what you need to do. Start by taking your paycheck that you earned from work and send that to your investment portfolio. And instead of living on your paycheck, whatever that paycheck is, it's being invested and you're gonna pull out from your investment portfolio $10,000 per month on the first day of each month. What does this do? Well, this allows you to prove to yourself that you can actually live on that. If you're consistently taking additional one-off amounts from your portfolio because that $10,000 is not enough, great. That's telling us $10,000 isn't actually your number. Or perhaps you're not spending the entirety of that $10,000 per month. That tells us that we can actually lower that number. But the mistake people make is they think they know the number because they add up some of those core bigger expenses that they pay every month, but they forget about the one-time stuff. They don't factor in how some of those expenses will change in retirement. By acting as if, by living as if, by forcing yourself to live on that actual number before you retire, you're gonna be able to be much more confident going into your retirement years, knowing that you've already proved to yourself that that's the actual amount you're living on.

3. Roth Conversions Over Time

SPEAKER_00 3:20

The third habit that they do every year is they do small Roth conversions spread out over time as opposed to one big one. Now, people love to get locked in on Roth conversions. They love to think about moving money from pre-tax accounts to Roth accounts and never paying taxes again after you pay that tax bill. That's typically not the best way to approach it. The best way to approach is to look at the next several years of your life. Understand what tax bracket you're expected to be in, understand what accounts are you gonna be drawing from, and then understand how much should you be converting year after year to make sure you're minimizing your lifetime tax liability. You don't do all that in one year. You can map it out in one year, but the actual implementation takes years and decades even to fully execute. It's just like marathon training. You're not gonna go out and run 26 miles on the first day. You're gonna build up to your target run. You're gonna build up to your target conversion. So apply that same framework. This isn't some sexy one-time move that you do. It's a boring habit that you continue to implement to make sure that you're maximizing the impact that that Roth conversion strategy can have for you. The

4. Personalized Social Security Plan

SPEAKER_00 4:22

fourth habit is this decide your social security claiming strategy based upon your health and your spousal situation, not some generic formula. One of the most common things I see that steers so many retirees astray is the concept of a social security analysis. Maybe you got one because you went to a seminar at a local community college. Maybe you got one because you did something online. But what you're looking at is social security in a vacuum. And all you're plugging in is your benefit amount and how long you think you might live. And it's gonna spit out a recommendation that tells you when to collect. That is a totally incomplete way to do this. There's so many other things you need to factor in. Factor in your health, factor in your spousal situation, factor in other sources of portfolio income. But your health, the market, your spending patterns, all those things are gonna change when you should actually collect Social Security. And this isn't a one-time decision. You don't look at this at age 60 and say, I'm gonna collect at 70 and never review it again. You should be reviewing this every year. It's a boring thing to do, but if you do this consistently, pulling that forward or pushing it back in some cases can be the difference between a great retirement and one that leaves you worried and running out of money. So make sure that you're doing this and reviewing this every year to ensure that your social security strategy is really tightly aligned with the rest of your financial picture. Those four alone can change how much you keep and how confident you feel. But these other habits can make a huge difference in what things look like in the end. Here's the

5. Three Tax Buckets Setup

SPEAKER_00 5:42

rest. Number five, build three tax buckets before age 55, not after. So what are those three buckets? You have pre-tax accounts, IRAs 401ks, you have tax-free accounts, Roth IRAs, and you have taxable accounts, which are your brokerage accounts. What you want going into retirement is a mix of all three. Now there's no perfect formula for how much you should have in each of those, but what that does is it starts to give you flexibility and starts to give you freedom so that when you retire, you have the option of where you're gonna pull money, how you're gonna pull money, how you implement things like asset location to drive down your tax bill. What you're doing is you're setting yourself up to have all the different tools in the tool chest you could need to make the most of your retirement years. Now, this isn't a one-time thing that you do. This is one of those boring habits that even if you just start out with small amounts of money, say for example, all you've ever done is put money into your 401k and you've built quite a large balance. That's great. You just don't have a ton of flexibility with where money is gonna come from in retirement. Can you start building your brokerage accounts? Can you start building Roth accounts? Can you start doing other things so that by the time you get to retirement, you have options of where to pull from, which will dramatically help with your tax strategy and will also help with your psychology of knowing that you have different options of where to pull from and not everything is gonna be hit with a huge tax bill if all of it is pre-tax.

6. RMD Planning Early

SPEAKER_00 6:55

The sixth habit: run an RMD projection in your 50s and 60s, not just your 70s, and redo it every year. For a lot of you watching, your required minimum distributions won't kick in until age 75. You should not wait until 75 to come up with a game plan of how to address that. What you wanna be doing is in your 50s and your 60s, understand what your taxable income looks like today. Understand what your required distribution is projected to be, and then understand what that gap looks like between the two of them. What tax bracket are you in today? What tax bracket are you likely to be in in the future? And then what about that middle ground, that time in between retiring and RMDs kicking in? Is there room, is there flexibility to implement a Roth conversion, to spin down your IRA, to implement qualified charitable distributions? What are the things that you can do to make sure you're taking steps today to protect your tomorrow? I see so many people who retire and they've been diligent savers, they've been great investors, but they never thought to look ahead. And by the time that they get to their retirement years, their later retirement years, RMDs have kicked in and there's not really much they can do to stop that. The right strategy starts in your 50s and 60s, and it's something that you need to revisit regularly to make sure you're staying on top of it.

7. Right Size Cash Reserves

SPEAKER_00 8:03

The seventh habit is keep revisiting how much you hold in reserves. This becomes critical as you get closer and closer to retirement. In retirement, there are going to be downturns in the market. There will be several downturns in the market. Those don't have to hurt you, but you need to have the right portfolio strategy to protect against it. The way that you do that is you're constantly right-sizing. How much do you need in cash reserves or fixed income reserves, the types of investments that are not subject to the crazy ups and downs of the market? The amount that you need should be a reflection of how much you're spending, how much other income sources you have, and that should drive what that reserve amount is. But a boring habit that people implement that leads to success is continuing to right size that. That ensures that when things go down over here, you've got the appropriate amount here for that not to hurt you. Too little and you're gonna get burned. Too much, and you're gonna be leaving growth on the table. So having the right amount is a continual process that makes sure that you're set up for success. Now, real quick, if you're within a few years of retirement and you have at least a million dollars saved, I recorded a short video that shows you the exact process we go through at Root Financial to turn your portfolio into a reliable income stream and also execute this tax strategy the right way. Click the link in the description or the top pin comment that says watch the Sequoia system video to check that out

8. Plan Your Withdrawal Order

SPEAKER_00 9:17

now. The eighth habit, write down a withdrawal order strategy in advance so that you don't become reactive. If I was to ask you right now, the year you retire, where are you going to pull income from? Do you say your 401k? Do you say your Roth IRA? Do you say your brokerage account? Okay. Well, why? Do you have a strategy and do you have a reason for why you're pulling money from each account? Because any of those could work, but it needs to be tied to the specific strategy that you're implementing. Here's the thing. If you don't have a strategy in advance, you become very reactive. You pull money from the thing that hurts the least that year, which isn't always the best thing to pull from long term. So write this down in advance. Have this as part of your plan in advance. It doesn't mean you're handcuffing yourself to only doing that, but you're making a logical, planning-based decision as opposed to an emotional one, which is what we end up doing when we become reactive. So keep the high level, keep it flexible, and map out the next five to 10 years so that you have confidence going into retirement of where that income is going to come from. The

9. Rebalance To Stay Diversified

SPEAKER_00 10:10

ninth habit people implement is rebalancing. Now, if you look at your portfolio right now, I promise you there are some investments in there that you love, and there are some investments in there that you're wondering why you even own them. Some investments have gone up a whole lot in recent years, while some have stayed flat or even gone down a little bit. That's perfectly normal. That's how it's supposed to go. That is why we diversify. And if we knew that exact trend was going to continue, I would say sell all of your losers and only double down on the things that are going up. That's not how life works, and that's not how investing works. What goes up will come down, and what's gone down will come up, assuming it's a prudent, diversified investment. So here's the thing we get caught up in what's done well and we don't want to rebalance. We want to let our winners keep winning, and we actually want to sell the things that have underperformed. But the things that performed best this decade weren't the same things that performed best the previous decades. That tends to ebb and flow. And in your retirement years, the biggest risk in your investment strategy is becoming too concentrated in owning one type of thing that goes down and stays down for a prolonged period of time, probably not when you expected, and then having no other assets to draw from. You were too concentrated in one thing and that lost you all the flexibility that you could have had to draw income from the investment that was up or that it stayed stable. So a boring thing that you need to do is you need to continue to diversify. So that's the tax and the account side buttoned up. But knowing your numbers doesn't help if you haven't planned for the years before everything kicks in, are what you're actually gonna do when you get

10. Plan Your Bridge Years

SPEAKER_00 11:32

there. That's why the next boring habit is build a bridge years income plan. What do I mean by that? Well, when you retire, in many cases, you're not collecting Social Security right away or a pension's not starting right away. You're gonna have a gap. You're gonna have a gap between the year you retire and the year those income streams actually start coming in, which means what do you do in those years? It's in those years that you need to change your portfolio allocation. You at least need to take a part of your portfolio and invest it differently than you otherwise would have because you've got much more of a demand on it. You almost need to think about your portfolio in two sections. Let's say you're 63 and you retired and you're gonna delay Social Security until age 70, because that's when you maximize your benefit. You almost need to think of one portfolio for ages 63 to 70, and then another portfolio for ages 70 and beyond. Now it doesn't actually have to be two different portfolios, it can be the same mix, but here's why you do that. From 70 and beyond, you're gonna need much less from your portfolio, which means your stock to bond allocation in those years can be dramatically different than ages 63 to 70, when you need a lot from your portfolio. That portion is gonna need to be a lot more conservative. So when you look at your portfolio as a blend between those two things, you can ultimately allow all that to flow up into one portfolio, but you've got different assets allocated for your bridge years, age 63 to 70, and then your years age 70 and beyond. And then this becomes something you need to revisit yearly. Health changes, markets change, inflation changes, life changes. So make sure that that gap, that bridge plan, is continuing to be revisited so that you're not keeping too much in conservative investments, but you're also not keeping too much in aggressive investments that could get your retirement off course.

11. Needs Versus Wants Budget

SPEAKER_00 13:03

The next habit: separate your needs from your wants. Now, ultimately you have one number that you want to live on, but this is critically important because there will be a downturn in the market. And when there's a downturn in the market, let's assume you want to spend $10,000 per month. If the market drops and you have to cut your spending, you're gonna panic if you treat all that $10,000 per month the same. But if instead you look at that $10,000 per month and say, okay, $7,000, that I actually need that to lift. That's property taxes, that's groceries, that's just everyday living. $3,000, you know, that's discretionary. I'd like to have it, but if I had to cut it temporarily, not the end of the world. Well, when a downturn happens, you're emotionally and financially prepared to say, okay, if I need to cut back, I know exactly where I'm gonna do. So it's not the same level of panic. You actually have a plan that you can implement to say, if this happens, here's the change I'm going to make. So separate those expenses so that you know what those changes would be if you needed to make an adjustment. The

12. Automate Fun Spending

SPEAKER_00 13:53

next habit is automate transfers into travel funds or hobby funds. Here's gonna be something you struggle with. You're gonna tell yourself you want to travel. You're gonna tell yourself you want to do all these fun things, but then you're gonna get to retirement and it's gonna be difficult because you spent your entire life maxing your 401k, building your accounts, growing this thing. And now all of a sudden you're supposed to spin that thing down. And not just that, but you're supposed to spin that down even when the market's going down. That becomes a very difficult thing to do. Even if on paper everything looks great, you know your withdrawal rate is sound, you know that your portfolio can support it. I'm telling you, it's going to be challenging. You don't just go from saving mode to spending mode without any psychological friction going on there. So here's how you combat that. You automate your spending. If I know I want to take a couple trips this year, and let's say I want to budget $30,000 per year and do that, that feels really painful in retirement to take that from my portfolio. I'm gonna start second guessing that. Wow, what could this $30,000 grow to? It took me all these years to get to this point. What if I just let it grow a few more years before I take that trip? Maybe push that trip back just a little bit and you fall into this trap of more and more and more. And what you realize is one day that more is continued, but your life has passed you by. So you combat that by forcing yourself to spend it. Take your portfolio and say, if I want to spend $30,000 per year on travel, I'm gonna take $2,500 a month distributions or $30,000 on the first of each year. Whatever it is, I'm just gonna automate it. That money goes to a savings account and it just sits there. Now, this isn't my core checking account where I'm spending money. This is a separate savings account. So psychologically, that money has already been spent, which makes it way easier for me to go book that awesome trip with my family, for me to go buy the plane tickets and do the thing because that automation took care of the psychological part for me. And now I can actually spend it and feel free and permission to do so. Do that with all the things that are difficult to spend money on. This could be travel, this could be hobbies, this could be giving. Automate it so that you don't have to make the intentional decision to do something that's gonna be difficult psychologically to do. The

13. Health Habits For Longevity

SPEAKER_00 15:49

next habit, now this might be the most boring of all, but also the most important of all. Get those annual physicals and checkups on the calendar. These should absolutely be non-negotiable for all of us. The reality is most issues, whether it's something that's not super severe or something like cancer, if we catch this stuff early, we are far more likely to be able to manage it. Where things go wrong is when something isn't caught early and it continues to grow. And by the time that it becomes an issue, it's past the point of no return. Your retirement is no good. If you have a health issue that puts you on the couch for the rest of your retirement, or worse, keeps you in the hospital for the rest of your retirement. You need to do this. If you're married, your spouse needs to do this. None of this matters if you don't have your health. So put those on the calendar. No one likes going to the doctor, no one likes getting these physicals, but that simple boring habit is what enables the rest of this to actually happen.

14. Build Healthy Habits Early

SPEAKER_00 16:40

The next one, build one physical habit at age 55 that you can still do at age 75. If you've been dying to start playing pickleball or you really want to get into tennis or golf or whatever it is, it's much easier to build that muscle memory, to build that habit at 55 than it is 75. So if you're getting off the couch at 75 and trying to play pickleball for the first time, good luck. I hope you do. I hope you try, but it's not going to go well. If you start that at 55, and if you play and you learn the muscle memory and your body does that while it's healthy and able, it's gonna be way easier to maintain that habit at age 75. So don't wait for a later date to start doing the things you want to do in your retirement years. Learn them now, develop the skills now, develop the muscle and the health and the ability to do those things now so you can carry that with you for the rest of your retirement.

15. Book The Next Trip

SPEAKER_00 17:25

Now, everything so far has been about the money and the mechanics. What's left is about the people in your life. It might be the most important part of this whole list. That's why the next habit is book the next trip right now. Pause this video, book that trip. Whatever you need to do, put it on the calendar. Too many people talk about the trips they want to take. They talk about the great family adventures, the cruise, the family vacation, whatever it is, but they never get around to doing it. Planning is kind of tough. Syncing schedules is kind of tough. Trying to get everyone coordinated is kind of tough. But if you don't do it, you will regret it forever. And if you do it, it might be one of the best things that you look back on in your retirement. So plan that big trip now instead of waiting one more year to keep saving and keep growing. And by the way, the hack here is most trips you book have cancellation windows. If you want to go to Hawaii with a whole family in a year, book it now. Book it with a hotel where you have the next 10 months to cancel. If you need to, if it doesn't work for everyone's schedule, no worries. You get all your money back. But at least you have something on the calendar that becomes a forcing function to get people to commit to a certain time and place.

16. Practice Spending Before Retiring

SPEAKER_00 18:28

The next habit, practice spending on purpose in your 50s so that retirement doesn't force the shift. I mentioned this before, but years of saving makes it very difficult to one day flip and start spending that portfolio down. I don't care how much money you have. I don't care if you have 10, 20, 30 million dollars in your portfolio. There's something psychologically that's difficult going from saving an investing mindset to now I'm spending this money down. Something about it feels wrong. That's why you need to practice while you're still at work. And here's how I recommend you do this. At some point along your investing journey, you reach financial independence. Financial independence is that point at which you could stop working today and not ever have to worry about money again. Your portfolio can meet your income needs regardless of whether or not you're working. At that point, I recommend you stop saving. Now, sure, take advantage of your 401k match, but stop saving money that you're not going to really need to spend. Start taking that and practice the lifestyle you want to live. Take the nicer trips, upgrade to first class, give the gift, support the family member. Start doing the things that you want to do now. That will make it much easier to do when you have the backstop of knowing you still have a paycheck coming in. That's much harder to do when the paycheck stops and you're now trying to learn this new way of spending that's completely foreign to what you've ever done. If you do this right, that will already feel normal. By the time that you retire, you won't spend the first several months or years fumbling through this new lifestyle you're trying

17. Letter Of Instruction

SPEAKER_00 19:50

to support. The next habit, write a simple letter of instruction for your spouse. My guess is if you're still watching this video now, you're on YouTube watching a finance video and you're several minutes into this thing, you probably have some interest in finances. I mean, I guess for a lot of you, your spouse doesn't have that same interest. So if you're one of those individuals where you know everything, you know where the accounts are, you know the passwords, you know when you can retire, you know what your number is, you know what the tax strategy is gonna be, that's great for you. But there's a 50-50 chance you're gonna pass away before your spouse does. Heck, there might be a higher than 50-50 chance. Are they gonna be okay, not emotionally, but financially, if you were to pass? If they can't log in, if they don't know where stuff is, that's an enormous burden that they're gonna face because they don't know where everything is. Write a simple letter of instruction. Here's where the accounts are, here's the professionals in our life, here's our advisor, here's who needs to be notified, here's where the trust documents are, here's where the insurance policies are. Just give a simple letter of instruction so that if something happens to you, when something happens to you, they're gonna be okay. Doesn't need to be complicated, it just needs to exist.

18. Talk Money With Kids

SPEAKER_00 20:50

Next habit is have the conversations with your adult children about money. Be open about what you've built and how you intend for it to impact their lives. This doesn't mean you need to tell them you're leaving them everything. This could simply be telling them that what you've built, you want to maximize this while you're here. You want to live your life. And my guess is your children are okay with that. See, too many people shy away from these conversations with their children, with their family because they think that there's some expectation on them that doesn't actually exist. Now, to be fair, sometimes that expectation does exist, but all the more reason to have this conversation. You don't want them to wake up one day resenting you because there was an expectation that you allowed them to carry that you had no intention of fulfilling. You spent your whole life building this. How do you want to use that to maximize what you can do and what they can do? Whether that is leaving them something, whether that's living in such a way where you want to bring them in to experiences that you have while you're still here, whether that's gifting along the way, but have those conversations now before they're forced. Because what's going to force them is you cognitively, at some point, are gonna start to decline. There's gonna be a health event where you no longer have the capability to manage your own financial affairs. If you haven't had that conversation with your adult children before, it's gonna be a challenge. So have that now and continue to have that to stay open about what the intention is with

19. Talk Money With Parents

SPEAKER_00 22:01

your finances. And then the flip side of this, the 19th boring habit, is have that same conversation with your parents before it's too late. Now, this is especially important. If you're a trustee or an executor, what are their intentions? What do they want to have happen? Where do they want to age? Who do they want to be around? What does that money represent to them? Have those conversations before it becomes too late because they're either cognitively unable to or they pass away before you're fully able to fully understand what that is. Let this be something that connects you with them, but there's a lot of challenges I see. When things go unsaid and neither party is willing to broach that conversation and it gets challenging and it gets ugly and it can tear families apart. So make sure that doesn't happen and make sure that you're having that conversation so that money can actually be a thing that blesses your family and allows you to get closer by having amazing experiences while you're here and shared intentions for

Wrap Up And Next Steps

SPEAKER_00 22:49

when you're not. None of these habits are complicated on their own. What makes them work is starting years before you think you need to and then continuing them throughout your retirement. The ones who retire well are not the ones with the most clever strategy. They're the ones that quietly did the boring stuff, the consistent stuff, for a long period of time. Now, if you want to see how to implement these financial habits and to assist and that ties everything together to support the life that you want to live, click the link below. Check out the Sequoia system video where I show you how we at Root Financial have a custom system designed to help you do just that. The link is in the description, the link is in the top pinned comment. It will show you how all this can come together nicely. And if this was useful, the next video you need to watch is this one. This video is about what 10 things you should sell before you retire.