Pre-retirement.
Ages 50 to 65.
The final stretch. Decisions here echo for 30 years. Sequence-of-returns risk, Roth conversions, Social Security timing, Bitcoin position sizing as volatility stops being abstract and starts being personal.
This page covers personal finance fundamentals that apply regardless of your view on Bitcoin or fiat currency.
Move toward a stable glide path. Start Roth conversions in lower-income years. Delay Social Security to 67 or 70 if your health and cash flow allow. Understand Medicare and IRMAA before 63. Rebalance Bitcoin to 5 to 15% of net worth. Put the right assets in the right accounts - bonds in traditional, stocks in taxable, Bitcoin in Roth.
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.
Starts retirement with $1M. Market drops 30% in year one. Withdraws $40K per year. Portfolio shrinks faster than it can recover. High risk of running out.
Same $1M. Market rises 30% in year one. Same $40K withdrawals. Portfolio grows while being drawn down. Ends decades later with more than they started.
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 conversion moves money from a traditional IRA 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 RMDs.
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.
A couple retiring at 62 with $2M in a traditional IRA could realistically convert $100K+ per year during low-income years, shifting $500K+ into tax-free Roth over five years. The tax bill now is a rounding error compared to the RMD tax hit later.
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 AGI 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 harvesting on other positions to offset BTC gains where possible.
- Consider a gradual exit plan - see Exit Strategy.
A 50% Bitcoin drawdown at 40 is a buying opportunity. A 50% drawdown at 62 while you are preparing to retire can be catastrophic. Position size accordingly.
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
- Social Security Administration benefits calculator - ssa.gov
- Medicare.gov - Parts A, B, C, D overview - medicare.gov
- IRMAA income thresholds - ssa.gov
- Kitces - Sequence of returns risk - kitces.com
- Bogleheads wiki - Asset location - bogleheads.org
Last updated 2026-04-14. Not financial advice. Do your own research.
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