Pre-retirement.
Ages 50 to 65.

The sequence-of-returns risk

Two retirees with identical lifetime 7% average returns can end up wildly different - just based on which year the crash arrives. A 30% loss in year one of retirement, while you are withdrawing, is very different from the same 30% loss in year 15 with no withdrawals.

The fix is not perfect timing - it is a cash buffer. Hold 2 to 3 years of expenses in cash or short bonds at retirement. When markets drop, you spend from the buffer and wait for recovery rather than sell at a loss.

Roth conversion ladder

A Roth conversionRoth conversionMoving money from a tax-deferred retirement account (where you'll owe tax later) into a Roth account (where everything grows and comes out tax-free). You pay regular income tax this year on the amount moved.Full definition moves money from a traditional IRAIndividual Retirement Account (IRA)A personal retirement savings account with tax advantages. Two main types: Traditional (tax now, pay later) and Roth (pay now, tax-free forever).Full definition or 401(k) into a Roth IRA. You pay tax now at today's rate; the money grows tax-free forever and is never subject to RMDsRequired Minimum Distribution (RMD)The minimum amount the IRS requires you to withdraw annually from Traditional IRAs and 401ks starting at age 73 (rising to 75 in 2033). Calculated as account balance divided by your IRS life expectancy factor. Roth IRAs have no RMDs during the owner’s lifetime..

The opportunity is largest in the years between retirement and age 73 when RMDs kick in. Convert enough each year to fill the 12% bracket (and the 22% bracket for larger estates) and never pay 22%+ on that money in retirement.

Social Security optimization

You can claim Social Security anywhere from age 62 to 70. The tradeoff: claim early and get a reduced monthly benefit, but get it for more years. Claim late and get a much larger check, but for fewer years.

General rule: if you expect to live past 82, delaying pays. If family history suggests earlier mortality, claiming earlier is defensible. Spousal strategies matter - the higher earner usually delays to lock in a larger survivor benefit.

Medicare basics

Eligibility begins at 65. Enrollment windows have real penalties if missed. Know the four parts:

• Part A (hospital): free for most. Covers inpatient care.
• Part B (medical): monthly premium. Doctor visits, outpatient. Around $175/mo base.
• Part C (Medicare Advantage): private bundled alternative. Sometimes cheaper monthly, sometimes more restrictive.
• Part D (prescription drugs): separate premium. Required unless you have creditable coverage.

IRMAA (Income-Related Monthly Adjustment Amount) adds surcharges to Parts B and D once your modified AGIAdjusted Gross Income (AGI)Your total income minus certain deductions, used to calculate your tax bill.Full definition crosses thresholds. In 2026, those thresholds start around $106,000 single / $212,000 joint. Income in retirement is not just "how much you need" - it also determines healthcare premiums. This is another reason Roth conversions matter: Roth withdrawals do not count toward IRMAA.

Bitcoin at this stage

This is where a lot of long-term Bitcoin holders have to be honest with themselves. If you began at 40 with a 5% position and it grew to 25% during a bull run, that is no longer a 5% portfolio. You are now running a Bitcoin-heavy portfolio that happens to contain other things.

Target allocation at this stage is typically 5 to 15% of net worth. If you are above that band:

• Rebalance during strong rallies, not crashes. Trim the top, not the bottom.
• Use tax-loss harvestingtax-loss harvestingSelling an investment that has declined to realize a tax loss, then buying a similar investment, reducing your tax bill without changing your portfolio.Full definition on other positions to offset BTCBitcoin (BTC)The ticker symbol for Bitcoin, used on exchanges and in price quotes.Full definition gains where possible.
• Consider a gradual exit plan - see Exit Strategy.

Asset location

Asset allocation is what you own. Asset location is where you hold it. Getting location right can add 0.5%+ per year in after-tax returns for no extra risk.

Next steps