The 4% rule says you can withdraw 4% of your retirement savings in year one, then adjust that amount for inflation each year, and your money should last at least 30 years. On a $1 million portfolio, that means $40,000 per year. It is a starting point, not a guarantee, and your actual safe withdrawal rate depends on when you retire, how your portfolio is allocated, and what your expenses look like.
The answer depends on your expected annual expenses in retirement, not a single magic number. A common starting point is multiplying your annual spending by 25, which comes from the 4% withdrawal rule. Someone who needs $80,000 per year needs roughly $2 million saved. But healthcare costs, Social Security timing, your tax situation, and how long you live all affect the real number significantly.
For anyone born in 1960 or later, the full retirement age for Social Security is 67. If you were born in 1959, your full retirement age is 66 and 10 months. Claiming before your full retirement age permanently reduces your monthly benefit. Waiting until age 70 increases it by 8% per year past full retirement age.
A Roth conversion means moving money from a traditional IRA or 401(k) into a Roth IRA. You pay income tax on the converted amount now, but all future growth and withdrawals are tax free. It makes the most sense when your current tax rate is lower than you expect it to be in retirement, typically in the years between retirement and age 73 when Required Minimum Distributions begin. It is not right for everyone and the timing matters significantly.
No. Beneficiary designations on retirement accounts, life insurance policies, and transfer-on-death accounts override your will entirely. If your will says your daughter inherits your IRA but, your ex-spouse is still listed as the beneficiary on the account, your ex-spouse receives the money. This is one of the most common and costly estate planning mistakes families make.
A will only takes effect after you die and goes through probate court, which in Connecticut and New York can take 12 to 18 months and costs 3 to 7% of your estate’s value. A revocable living trust bypasses probate entirely, protects your assets if you become incapacitated while alive, and keeps your family’s financial matters private. Most families need both.
The federal estate tax exemption in 2026 is $15 million per person, or $30 million for a married couple, following the One Big Beautiful Bill Act signed in 2025. Connecticut has no state estate tax. New York’s exemption is $7,350,000, with a tax cliff that means estates above 105% of that amount are taxed from dollar one.
An irrevocable trust permanently transfers assets out of your estate and cannot be changed or reversed once signed. Unlike a revocable living trust, it can reduce estate taxes, protect assets from creditors, and shield assets from Medicaid spend-down requirements if set up at least five years before applying for care. You give up control in exchange for protection.
Most non-spouse beneficiaries who inherited an IRA after January 1, 2020 must empty the account within 10 years of the original owner’s death. If the original owner had already started taking Required Minimum Distributions, annual distributions are also required during that 10-year window. Missing a required distribution carries a 25% penalty. Surviving spouses have different and more flexible rules.
The biggest risks to a retirement income plan are sequence of return risk (a market downturn in the first years of retirement), healthcare costs that rise faster than inflation, and outliving your savings due to a longer lifespan than planned. The answer is to build a diversified income strategy that includes guaranteed income sources, tax-efficient withdrawals, and a plan for healthcare costs specifically, not just a single portfolio withdrawal rate.
The right age to claim Social Security depends on your health, your other income sources, and whether you are married. Claiming at 62 permanently reduces your benefit by up to 30%. Waiting until 70 increases it by 8% per year past your full retirement age. For married couples, the claiming strategy for each spouse matters significantly because of how survivor benefits work. There is no single right answer that applies to everyone.
A complete estate plan typically includes five documents: a revocable living trust, a pour-over will, a durable power of attorney, a healthcare proxy, and a living will or advance directive. Most families only have a will, which still goes through probate and does nothing to protect them during incapacity. A licensed estate planning attorney can draft all five documents and coordinate them with your financial accounts and beneficiary designations.
Most financial advisors can help you build an investment strategy and retirement income plan, but they cannot draft legal documents like trusts, wills, or powers of attorney. Most estate planning attorneys can draft the documents but do not manage investments or build coordinated retirement income strategies. John F. Davenport, Esq. holds both credentials, which means your legal documents and financial plan are built together as one strategy rather than in separate offices.