By Tony Delane, CFP®, AIF®, Wealth Advisor
Key Takeaways
- Redefining the finish line can be a major barrier. High earners may often delay retirement by continually setting new savings or career milestones. Defining “enough” in writing and creating a clear exit path can help prevent endless goalpost shifting.
- Diversification across tax buckets and time horizons is essential. Many high earners focus on growing assets but can overlook how they’re structured. Concentration in a single account type, lack of liquidity, and poor planning for staggered income streams can create unnecessary risks, especially during market downturns.
- Jumping abruptly into retirement can be emotionally and financially jarring. Testing retirement ahead of time—through hobbies, part-time roles, or phased transitions—can help ease the shift. Practicing life on a fixed income before retiring can also reveal potential adjustments.
- Purpose matters as much as finances. A lack of clarity around passion projects or future engagements can unsettle a retirement plan more than the financial aspects. Planning for how you’ll spend your time is just as important as preparing your balance sheet.
For most of us, a successful retirement represents the capstone of a lifetime of hard work, diligent saving, and careful preparation. Over the years, we’ve worked with many clients to plan for retirement, and disciplined saving is a key component of the best retirement plans for high-income earners. High-earner retirement planning also involves financial decisions assisted by sophisticated software planning tools.
But retirement planning can often rely as much on emotional and psychological decisions as it does on financial ones. We’ve traveled that path many times with clients, and have come to appreciate what helps make a successful—and sometimes not-so-successful—retirement plan work. The habits that can derail retirement aren’t always obvious.
Here are three common bad habits we’ve seen that can keep high-earning and well-intentioned clients from achieving their retirement goals.
1. Constantly Moving the Finish Line
Retirement may seem “just around the corner,” after the next stock vest, bonus cycle, or milestone. Sometimes the finish line isn’t even about work; it’s a spending target or asset size you’ve decided will make you feel ready.
The problem? Once you hit that number, a new one appears. The goalpost keeps shifting. High achievers thrive on progress and targets, so the idea of “enough” feels uncomfortable. Market volatility and uncertainty can make it tempting to delay decisions until things feel perfect. In our experience, that perfection may never come. We are sometimes asked what average retirement savings for high income earners look like. Truthfully, there is no perfect answer as your plan and savings goals should be unique to you.
The Solution: Define what “enough” looks like—in writing. Build a financial goal plan that includes cash flow needs and income expectations, and build in a safety net for the unknown. Once the target is defined, create an exit path designed to maximize your bonus and stock vesting cycles. And importantly, lean on our HH team to help make sure your i’s are dotted and t’s are crossed.
2. Neglecting Diversification Across Tax and Time Horizon Buckets
Here’s something specific we see related to savings pre-retirement. Many high earners focus on growing assets—but overlook how those assets are structured. These can involve both tax structures (i.e. taxable, tax-exempt, and tax-deferred), or time horizon structures (i.e. short/medium/long-term money).
Without a mix of taxable, tax-deferred, and tax-exempt accounts, you lose flexibility for tax planning and cash flow management. Worse, starting retirement without a healthy short-term cash position exposes you to sequence-of-returns risk. This occurs when you’re forced to sell investments in a down market to cover immediate expenses.
The three main symptoms we see when evaluating a retirement plan that has neglected this diversification include:
- Heavy concentration in one bucket such as an employer 401(k) plan, with little savings elsewhere. If your budget allows, try to spread savings around to build up balances in the smaller accounts.
- Overconfidence in portfolio growth may overshadow liquidity needs. Cash isn’t the most exciting asset to hold, but is a key part of helping smooth out cash flows during retirement, especially when markets are choppy.
- Lack of planning for staggered income streams like pensions, Social Security, and required minimum distributions (RMDs). It can be wise to develop a cash flow plan that seeks to maximize your tax brackets with Roth conversions and other strategies. As more secure income streams start, you can adjust your short-term cash bucket accordingly.
3. Making an Abrupt Transition to Retirement
After decades of high-intensity work, many professionals jump straight from 60-hour weeks to full retirement. This can be a very jarring transition, both financially and emotionally.
Suddenly, you wake up on Monday morning with nothing to do and no paycheck coming in. Relying on assets for cash flow feels different than earning it. Our advice is to get ahead of this issue and make an honest effort to plan for both the financial and emotional side of retirement.
Prototype your retirement. Start hobbies, plan trips, or take on passion projects before you retire. Consider a phased approach. Consulting, part-time work, or board roles may ease the transition. Retirement isn’t just about money; it’s about purpose and structure. Test-drive it so the shift feels exciting—not unsettling.
On the financial side, we encourage clients to live on a fixed income leading up to retirement to see how it feels. Set a budget, and stick to it. Even while that paycheck is still coming in, this is the perfect time to see if planning estimates are correct and figure out where adjustments can be made. This can help ease the transition when it really comes time to buckle down.
Planning for Your Passions in Retirement
We hope you find these observations helpful when planning your own retirement journey. We cannot emphasize enough the value of planning ahead and thinking about some of the potential non-financial issues you may run into.
Lacking a well-defined sense of those passion projects and future engagements can often unsettle a retirement plan more than the financial aspects. If you’re planning to retire soon, reach out to your HH team to help you evaluate everything from all angles.
Learn how a pre-retirement checklist can help you plan for retirement.
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