7 Things You MUST Stop Doing Before You Retire

Retirement isn't just about what you start doing. It's about what you stop doing. If you've just retired or you're planning to retire soon, you probably think freedom comes from having more time or more money. But it's what you cut out that makes retirement work. After working with hundreds of retirees, our firm has seen the same habits over and over again. The ones that drain joy, money, and time. So today we're breaking down the seven things to stop doing after or even before you retire if you want to live a successful and long life.

Phil, what's the first of the seven on our list of things that people should stop doing in retirement?

Number one is people have to stop chasing performance. They have to stop chasing returns.

Yeah, we see it a lot. People get to retirement, they think they're supposed to keep getting these huge double-digit returns, and I think people forget that accumulation phase is different from distribution phase, for sure.

So definitely, so I think that's one where people make mistake. You think about running a marathon, Spell.

Yeah.

If, and you used to do a lot of running.

I used to.

Right. So you know what that's like. If you started to run a marathon, you wouldn't sprint at the beginning, right? You'd sprint on the last leg. That's where you try to pick up some ground, but if you were to sprint at the early part of that marathon, you'd be worn out before you ever got to the 25th or sixth mile, right? So I think it's more like that. People can sprint towards the finish line and be okay. But when it comes to retirement planning, you want to go for those nice larger returns. So in pre-planning for retirement, in the accumulation phase, you can think about sprinting and you're not going to run out. But if you try to keep doing that once you hit retirement, there's a strong chance that you get worn out and all of a sudden you get hit...

Yeah.

...with a major market downturn, and that can be devastating.

Yeah.

Once you're at, there's nowhere, there's no room to make up for that, for those losses. So I think people that chase those returns, they have to realize there's a change that happens when you get close to retirement, and you've got to dial back. In some cases, not every case, but in some cases, depending on capacity and tolerance, you've got to dial some of that back.

Yep. I agree. When that, your legs are tired at the end of a marathon.

Yeah.

And if you try to sprint final mile or two, you might run out of gas and never finish the marathon. That's the risk. And that parallels well into finance. You've done a great job running a wonderful race. You don't need to sprint at the end of the marathon. You're almost there. Don't risk the time, so to speak, or the return, just to get a little bit more money.

And I think that's the problem, is people, they're used to getting better performance. In fact, I just finished a call with a client a few minutes ago, and she's a participant in a 401k plan, and she loved the idea that her performance this year is almost 20%. And she said, what a great year. That's awesome. She said, "It's so much better than I was expecting."

Mhm.

Well, that's great, but she's now 58.

Yeah.

And so one of the conversations we'll have with this person, she's got a fair amount of money, well into the six-digit range, and she's going to have to think about dialing that back as she gets closer to real retirement, right? So I just think people, that's one of those things that I believe people should stop doing, not after retirement.

Yeah.

It's actually appropriate to start thinking about: is your portfolio designed properly leading into retirement?

Yeah.

You may not want to wait until you're there and then all of a sudden you have a market calamity, and then what?

Yep.

Maybe you end up being forced to go back to work because you lost half your nest egg.

Yep.

And for those of you listening who think that the markets can't fail, believe me, after 33 years of doing this, I've been through several market downturns, severe downturns, where the markets have corrected some 50%, and back in 2000 to 2003, the NASDAQ corrected 74%. And a lot of people, and I don't mean that, this is not flippant, a lot of people literally jumped out of windows.

Yeah.

And took their own life because they lost so much money and they weren't prepared for that, right? So that was just a catastrophe. And if you weren't prepared for it, it could have changed your life and perhaps even caused you to take your life. So chasing returns, bad idea.

Yeah.

Not saying to just get too conservative, saying that you need a plan. Need to make sure you got the right kind of allocation, the right kind of investment program for building towards retirement and getting into retirement and then retirement beyond. You've got to make sure those things are addressed.

Yep. Phil, what's the second thing people should stop doing in retirement?

Well, I think everybody takes time for granted.

Yeah.

And so you've got to stop doing that. People, they don't really have a plan sometimes for retirement. They don't really know what it is. But time in retirement is sort of like the sand, right? And the more you try to hold on to it, the faster it slips through your fingers.

Yep.

And so I think people tend to, they forget that, and they just think they're going to have so much of it. So what would be different is if you started to give your days purpose, right? And so if you don't give them purpose, then all of a sudden they disappear and you begin to wonder what happened.

Yep.

And so it becomes more like it's almost ephemeral, really. It goes quick. And so I think purpose is so important, but we've got to stop taking time for granted. Who knows how long you're going to live.

When I hear that, Phil, I think time is a scarce resource. We're all on a limited amount of time. We're all here for a limited amount of time. And so what we do with that time is vitally important. You sit on the couch every day and do nothing, you're taking time for granted. Do you get up in the morning and you do something productive? Do you read your Bible? Do you go to church? Are you a productive member of society? Are you working to better yourself or those around you? Then you're probably not taking time for granted.

But I look at it as, you have, financially, I look at it as you have a limited amount of time to accumulate wealth. When you run out of that time, and in this case I'm talking about retirement, when you decide to retire. For those of you who are younger that are listening, you may not have the luxury of social security. So you might have to work more in order to bridge the gap.

Particularly for retirement now that most people expect to have 20 or 25 years, some 30, some 40 years in retirement. And so there's a lot of money and there's a lot of time that you have to spend creating wealth so that you can enjoy retirement. I think people lose sight of that and they just think, oh, I'll handle this tomorrow. You might not have tomorrow. There's just no guarantee. And so I think when people take time for granted, they miss opportunity. They miss doing the things that will matter.

Yeah.

And they don't do a very good job of planning, right? So I would say that as our number two thing to stop in retirement, or before you get there.

True.

Get a handle on what time means to you and what is part of where you want to go. What are the goals, and how do you build into your life purposeful, the purposeful use of time, so that you know why you're doing it. It's going to matter more.

What should people stop doing in retirement as number three?

Okay, I don't know if I want to be the guy that has to say this, but you know me, I'm a guy that throws it out there. Number three is stop rescuing your adult children at your own expense.

Yep. When I say at your own expense, I mean at your own expense as it relates to potentially sabotaging your retirement.

Yeah.

It's extremely important that you hear where we're coming from on this. The listeners, we want you to understand it's okay to help a child. It's okay to do that. But helping a child over and over and over to the point where you're making sacrifices for your retirement, you have to remember that kids have more time than their parents. Time, as we just mentioned in the last section, is limited.

Well, and to your point, Spell, if the child that's being rescued here, if they take time for granted, right, then of course they're not going to get where they need to go, right? But the reason they'll take time for granted is when there's a constant rescue boat, right, just over the horizon, and they know that in just a moment they're going to see it. And so I like to think of it as, parents tend to throw a life ring to the kids all the time.

Yeah.

Now, we're fortunate to have a lot of clients who won't do that.

True.

They have really helped their children develop, and their children stand on their own.

That's right.

And they've done a wonderful job. But we also have a number of clients who are throwing that lifeline all the time. And so if you're throwing a life ring to your children, or a life raft, while your boat is taking on water, then you might have a problem.

I'd say that you have a problem.

You might have a problem. And so I know that parents want to rescue their kids. It's instinctive.

It is.

I get it. And I don't have kids, but I do have nieces and nephews. And I have one nephew in particular. You know him. And that guy is like, if I could have a son, he's it.

Yep. Yep.

And I worry about him all the time. I think about him all the time. And always when he goes through a tough patch, I want to throw the lifeline.

Yeah.

And there's been an occasion where I did, but not without strings, right? It came with strings. And you had to do something in order to get this. You couldn't just get the hand out.

Well, Phil, that's a perfect analogy. A lifeline or a life preserver. If you throw it to someone without a string, you can't pull them back.

That's right.

You can't rescue them.

Or they got to learn how to swim, or I can't get the ring back if they miss it.

Right. True, too.

And so, just another metaphor here, a good friend of mine who lives in Tampa, Florida, he was a paratrooper in the military. And I think about him in all the jumps that he made. And I'm not a guy that's going to jump out of an airplane. If it's flying, man, I'm staying in it. The wings are intact, I'm in.

Well, you learned how to fly planes. So that makes sense.

And I want to fly them, not jump from them. But when he was jumping, and I think about when he was jumping, metaphorically, if the child never has to jump, then how will they ever learn how to land?

Yeah.

Right. And they have to at some point learn how to land. And it's the only way that he learned how to land. He had to jump out of the plane.

Yep.

And he didn't have a choice.

Yep.

Right. He would get pushed out of that plane if he didn't jump.

That's right.

So he had to learn to land. And I think every child needs to learn to land on their feet. And the longer that the parents don't allow that, the more likely that parent is reducing their own livelihood in retirement.

Yep.

Now, if they're super wealthy and it doesn't harm them at all, then fine, if that's what they want to do. But it's going to make it tougher and tougher on the kid.

Yeah.

And they're never going to let go...

Yeah.

...of the life ring.

It's true. So true. Paying for your kids' rent and mortgage payment temporarily, that could be okay, but we don't encourage it.

No, not a good way to do it.

Co-signing on a home, right? Trying to create that credit for your child. There's other ways to help them create credit versus you signing for them to get a home.

Well, you take a risk. Put your name on a home, it's a big risk. You expose yourself to credit risk.

You do. You expose yourself to a lot of risk. And paying off student debt. A lot of parents say, "Well, I don't want my kids to come out of school with debt." What's wrong with them coming out of school with debt?

Right.

That teaches them they need to go to work.

Right. Right. You got to pay the debt. You wanted the education. You got it. You chose to do maybe some higher ed. If the parent wants to pay for undergrad, then maybe that's okay.

Y.

But they just need to be careful with that. And then letting this one, this one probably bothers me more than any. It's letting the child nest indefinitely.

Yeah. Yeah.

Right. They've got to get out.

They've got to be on their own. They've got to learn.

Yeah.

And if they don't, then they may never leave. If they don't, or if a child needs to stay at home for whatever reason, you can always charge them rent. You can have them pay their fair share of the groceries, the utilities. Have them do their own laundry. Heck, have them do the household's laundry.

I was gonna say, give them something to do. Let them do some chores. Let them earn their way.

Absolutely.

Don't do everything for them.

Right. Right. They need that. That's how they're going to get better. And so, that's not to step on anyone's toes. That's not to say that kids are bad or parents are being bad or that you're just doing things wrong.

Mhm.

It's how do you get them to a place where you know they're going to be self-sufficient, and what we're talking about here is how do you avoid going through so much spend down to support them that you ignore your own ability to spend into retirement in a way that supports the lifestyle that you want and you've worked hard to get there.

Yep.

It's not as difficult as a parent thinks it is. And I know a parent doesn't want to hear this, but the fact of the matter is until you get them on their own, they will take everything that you give them and then some.

Yep. Phil, the fourth on our list of seven is a great one. What is it?

Doom scrolling. You got to stop doom scrolling.

We talked about doom scrolling a long time ago on the show.

Yep. But not in this context.

No, not in this one.

In this context, it's how is this doom scrolling, how is it affecting you and how is it taking away potentially from what could be a great retirement?

Yeah.

And so I think about particular clients that I've spoken to recently and I've coached them away from these negative news feeds and unfortunately they keep going back [laughter] and they wonder why they're almost depressed. They think, gosh, the world is in doom and gloom and the world's ending. Well, the world's not in doom and gloom. It's not ending. Is it great? Well, it's never perfect.

No, there's always challenges, whether it's political or financial or combination, whatever it is.

But it's never as bad as people think. But it tends to seem as though they're, it's being exacerbated because they're hearing one side. They're hearing the one that probably supports whatever their belief is. If they're left, right, if they're a left leaning, right leaning person, then they're going to watch that kind of stuff.

Yeah.

And that's going to always feed one side of the story, right? You're never going to find peace if you allow that kind of stuff to constantly infiltrate your heart and your mind.

And I think doom scrolling takes different forms particularly across different age groups. So for the younger group typically doom scrolling is synonymous with going through TikTok or going through Instagram or going through Facebook for hours and hours on end. I talked to some of my friends, Phil, who will spend three or four hours a day, sometimes in one sitting. They will sit in the same, they won't even get up. They'll go through their phone and all of a sudden look and think, "Oh my goodness, I've been doing this for three and a half hours." And it's mind-numbing and it's sad.

Well, if you look at statistics, statistics tell us straight away that depending on the age group, three to as many as eight hours a day—

Wow.

—is, are spent on scrolling. Not necessarily doom scrolling, but if you're scrolling, you're getting some doom in there [laughter] because there's plenty of news that's going to make you feel like the world's falling.

Definitely.

Right. And so you're going to get some of that, but 3 to 8 hours, that's a lot depending on the age. Can you imagine giving up eight hours of your day staring at a mobile device scrolling?

How do you have eight hours in a day to scroll?

Well, herein lies the problem.

Wow.

If you have that many hours a day, guess what? You're not doing working. You're not working. You're not being productive. You're certainly taking time for granted.

Yeah.

Right. You're doing a lot of the wrong things already, setting yourself up for failure.

True.

Turn it off for a while.

Yeah.

Right. Just cut it. Give yourself a break.

Yep.

Try it for a day. Try it for a week. Try it for 30 days. See if you can do it. Maybe you can, maybe you can't. But at least give yourself a limit every day and just say, "Okay, if I must scroll, if I must see the doom and gloom, let me limit it to one hour a day."

Phil, let's move on to number five. What's the fifth thing people should stop doing when they retire?

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But it's stop buying things [snorts] that you don't use.

Great piece of advice, Phil. I talked today to a client who retired this year and she definitely doesn't fall into this category. She has taken up classes to learn, or she's teaching herself how to build flower arrangements. That's her thing. And I've seen several pictures of these flower arrangements that she's put together. They're wonderful.

Oh, wow.

And she's extremely passionate about it. She even wants to spend part of her time going back to work doing this to provide some income for herself in her retirement, which I think is awesome. So, she is going to use those classes that she's purchasing to better herself.

But we talked about this and she said, and I actually told her that we were going to talk about this on the show tonight, and she said, "Oh, you might use the example of the golf clubs in the closet." And I said, "Actually, that's part of our show." So, she nailed it. But golf clubs in the closet, cars in a garage potentially. It could be a number of things that people think, "Oh, I've got all this time on my hands. I'm going to just try this and I'm going to spend a couple thousand here and spend a couple thousand there." And all of a sudden, several thousand dollars are gone and they don't use it anymore.

Well, Spell, you take the average person and they all have things that they don't use.

Yeah.

Now, they bought them with good intentions.

Sure.

Right. They expected to use it.

Yeah. [laughter]

But they probably didn't give it a lot of thought.

Yep.

They did it out of, for whatever reason, but some emotion kicked in and they said, "I've got to have this."

Yep.

Probably it comes down to a couple things. One, their neighbor did it or their friend and they thought, "Well, if they have that, I want one of those and I'm gonna do it. It looks fun, looks cool. They're enjoying it, so I'll probably enjoy it." And so, they buy it, or they see things that they tend to associate with a childhood dream. Oh, I've always wanted one of those. So they get it, but they don't have the training to use it. Maybe, whatever it might be, and then they say, "Well, I'm going to get lessons or I'm going to learn how." And they don't, right? I can't tell you how many times I see that happen with people who want to play the guitar or they want to do, and then they never go through with it.

True.

But they buy the instrument.

It's true.

And so I think people get stuck in that rut and they end up with a boatload of stuff that they never use. They have a shelf in the garage that invariably collects garbage. It becomes garbage.

Yeah.

Because it's just sitting there depreciating. Figure out what you really want to do in life. Put that on paper. Know it. Only buy the things that support that.

Yep.

And if it doesn't support it, then don't do it. And for crying out loud, don't do it because your friends do it. As you always say, don't keep up with the Joneses.

Yeah.

Stop. Just stop already and buy what you're going to use and get enjoyment from, but don't buy all the other garbage.

What's the sixth thing that people should stop doing in retirement?

Six is really good.

Yeah.

So simple. Stop spending time with people who are not building you. We don't want to confuse people that build you versus, or to people that just give you that sunshine pump. There's one thing I can't stand and it's the proverbial sunshine pump where it's nothing but almost this ingratiating kind of compliment that comes to people and it's not real.

Yeah.

And it doesn't build anyone.

Right. Right.

People say, "Oh, you, say something nice, say something kind, give them a kudos." Well, that's all well and good, but sometimes, as my mother always said to me, the truth can hurt. And if that truth is given the right way, that's what helps build people, right? Telling them how great they are when they really aren't, that doesn't build anyone.

I agree. I agree. So it's very common in our society and I, you know this, everyone in this firm knows this, but people just love to compliment and praise even things that they know, or that they'll leave the room after they've just given someone a compliment and say to their friend, that's not true at all. Her hair looks horrible.

Yeah. That kind of thing. To their face, they'll say, "Oh, what a beautiful dress. You look so good in that." And they turn around, walk out the room, go to their next friend or talk to the next person and they say, "Can you believe she's wearing that? It's awful." That's reality.

It is reality.

So, why not just not say anything?

Exactly. Just don't say anything. You should want to spend time with people who build you. And by that what we mean is the people who have built me in, I'm 27 years old. I've been through a lot of sporting. I've been through a lot of education and now I've been 4 and a half years in the working world, three and a half years at this firm. I've been around a lot of people who have built me. Those people, most of those people have not given me a ton of compliments. Not when they were building me. Maybe after the fact, after we won several games in a row and broke some school records on the soccer field. You think that that started by my coach just giving everybody compliments and telling us that we were great?

When you reach retirement, you need to be really careful about the people that you hang around.

It's true.

Because these people become your atmosphere.

That's exactly right.

And so if that's your circle of people and you're hanging with them, you need to be able to breathe that air. And if they're creating toxicity in that air, you don't want to be there. What I mean by that is if those people are building you by ingratiating and making you feel like everything's great, they could have you spending dollars that you shouldn't spend.

Exactly.

They could have you taking chances that you shouldn't take.

More discernment needs to be had.

That's right. And you need people in your retirement life that will tell you, you know what, that's probably not the smartest play.

Yep.

That might not be the wise thing to do. You need some of that. It might not sound good. And you might even get to a point where you say, I'm in retirement. I've worked so hard. I should be able to do what I want to do. Well, that might sound good, but the person that will tell you something that doesn't agree with that might be the one that you should listen to. You never know.

So, I love what you said. You didn't get built with sunshine pumps.

You didn't either.

I didn't either. And I'm so glad because today I can make better decisions as a result of that.

All right, Phil, I'm kicking it to you for number seven. This is the one that you were the most excited about.

Retirees make this mistake all the time. When they get towards retirement or close to, they have this idea that taxes will no longer be an issue for them.

Yep.

That they're going to end. And so they stop thinking about tax planning as much because they feel like, "Oh gosh, income's going to go down. I won't have a paycheck. Probably don't need to worry about it." But when you clock out of your job, i.e. move to retirement, right? Congrats.

Yep.

Great.

Yep.

Good career. You can now retire, right? But you can never retire from Uncle Sam. You're in partnership with Uncle Sam for the rest of your life, whether you like it or not.

That's true.

That's the reality. That's the reality.

And you made a great point the other day. I was listening to a conversation that you were having in the office. You said that someone's tax situation may become more complicated once they retire. Why? Why is that?

Well, it may not cost more than when they were at their peak working years or peak earning years, but complicated, absolutely.

Yep.

Because most people don't own businesses. Most people don't have all kinds of things to complicate a tax return in their working years, right?

Most people by and large are W2 and they have what we consider to be a simple tax return. Yep. It's not that complicated. Yep.

When you get to retire, now if you own businesses and all of that, then strike what I'm about to say. Sure. But once you get to retirement, you have something as simple as your social security, which everybody would think, well, that can't be taxed. I've paid tax all my life to get that. Surely they don't tax that. Well, absolutely. If you have something called provisional income, and you go over this small threshold, 85% of your social security gets taxed as ordinary income. Surprise, surprise. Surprise, surprise. That's just the first one. That's exactly right.

Now, we take that and add to it required minimum distributions. Yep. If you have an IRA or you've been saving in that 401k all your life, then chances are next to your home, the 401k represents this the largest asset that a person will own. That's exactly right. So, when the government at age for most people listening, it's going to be either 73 or 75. But when you get there, every distribution is going to be taxable unless it's coming from Roth type IRAs. That's right. If it's a Roth 401k, Roth IRA, then you don't have to worry about it. But if it's coming from traditional, there's another tax and it's taxed. Oh, go ahead. Well, it's forced. Yep. And it's forced at ordinary income rates. At ordinary income. We're not talking about capital gain here. Nope. Ordinary income. That's right.

So RMDs and now social security because on and by the way if you weren't paying tax on your social security once you get that RMD I bet you will probably. So there's two levels of tax or layers of tax right there. Then there's capital gains. You have any investments, then there's capital gains to say a brokerage account, be it an individual brokerage account, a joint brokerage account. Yeah. Any capital gain, any place where you could hold stock and or any securities that can appreciate or depreciate. Those are going to create tax and there's different levels of capital gains. Y right.

Then you have this weird little thing called IRMAA. And IRMAA, the acronym I-R-M-A-A. So we're talking about a different part of taxation here. Yep. That's not a direct tax to your income, but it affects what you pay for your Medicare premiums. That's exactly right. And a little change in your income can drive up those IRMAA costs very quickly. Significantly, significantly. So you have that to worry about.

Then you have adjusted gross income on the tax return. So, what's moving that up or down? You have tax exempt income. And people will say, "Well, good. I've got that. I don't have to worry about it." But guess what? When it comes to determining if your social security is going to be taxed at up to 85% of it being taxed as ordinary income, tax-exempt income, it's part of the equation. Yes, it is. It's part of the equation for IRMAA. Yes, it is. Now, people say, "Well, why in the world do I have tax-free municipal bonds in the first place?" Well, they're good to avoid federal tax, right? But they're going to go towards these other calculations and they could cost you some tax.

Now, the only way to get around all of this is Roth IRAs. Roth. Now, this show's not about Roth IRA, but it is an opportunity for us to say that if you don't have Roth, you need to talk to someone to figure out if you should. Y and if you're younger watching this show and you're not anywhere close to retirement, then I'm going to implore you, get a Roth, get started, do everything you can to pile as much money in that Roth as you can because that one tool can help you eliminate or at least control the tax bite y throughout retirement.

And if you're working and have access to a 401k, you should check your plan document to see if you can contribute to the Roth side of that 401k. Great point. So, Phil, you mentioned a Roth IRA, which for someone who's working and probably at that age, you're limited to $7,000 that you can put in. If you're over 50, you can do another thousand. This is a way for someone to potentially, depending on income, get another $23,500 into a Roth environment. Now, depends on your cash flow if you're able to do that much or defer that much, but it's definitely worth considering. Nice to have the option. Absolutely.

So taxes as you near retirement, they become more important. We talk about it more with clients when they're nearing retirement than at any other phase or stage of their life, right? Unless they are business owners, then of course it's a much more relevant topic. But as you near retirement, you need to be thinking about what does income look like in retirement and what are the things that are going to cause challenges as it relates to my spendable income. And the greatest challenge is tax. Absolutely.

And so I like to tell people it's not always how much you earn, it's how much you keep. Mhm. And taxes is the one place if we learn how to play the tax game, then you can minimize a lot of the what I believe is the theft of your hard-earned income. Yeah. And have more to spend. I agree. I agree.

So, there you go. There you have it. Seven things that you've got to stop either at retirement or in retirement or even before retirement. And if you want help with any of those seven, reach out to us. Doesn't have to be us. Reach out to somebody that can help you with those seven. If you work with someone, get help from them. Whoever it is, it doesn't matter. Get help, but make sure you get the right help. Yeah. Make sure you're asking the right questions. These are seven things you ought to be asking yourself and sharing them with your advisor to be sure that you're taking hold of all of these and dealing with them before it's too late.

Freedom in retirement isn't about having nothing to do. It's about finally doing what matters. If you love this episode, click or tap the screen now for our entire playlist on keys to successful retirement.