Question 1

How do deferred compensation distribution elections affect retirement taxes?

Accepted Answer

Non-qualified deferred compensation (NQDC) pays out on a schedule elected years before retirement, before most people can see their full income picture. Each payout counts as ordinary income the year it lands, with no capital gains treatment. Redeferral is possible but must happen at least 12 months before the original date and push payment out at least 5 years.

Question 2

How do you get health insurance if you retire before 65?

Accepted Answer

Four bridges cover the gap to Medicare: COBRA continuation for up to 18 months at full premium, an ACA marketplace plan with income-based subsidies, a spouse’s employer coverage, or retiree health benefits if your former employer offers them. Which accounts fund your income during those years changes your ACA subsidy eligibility.

Question 3

Should I take my pension as a lump sum or monthly income?

Accepted Answer

It depends on what else will pay you. Monthly income lasts for life and can carry a survivor benefit and cost-of-living raises, while a lump sum gives you control of the money along with the investment risk and the risk of outliving it. Compare both against your Social Security age, savings, health and your spouse’s needs.

Question 4

Should I take the Social Security Leveling Option?

Accepted Answer

It fits best if you will claim Social Security at 62. The option pays a larger pension until 62, then lowers it for life by your age-62 Social Security amount, so your income stays level only if Social Security starts then. Claim later and the pension still drops at 62, leaving a gap your savings must cover.

Question 5

What happens to your company equity when private equity buys your employer?

Accepted Answer

A private equity buyout converts your equity into rollover units or a new incentive plan with double-trigger vesting, requiring both time and a future sale or IPO before you can cash out. The value on your statement is an estimate, not a price, and it can shrink in a sale below the fund’s purchase price or behind liquidation preferences that pay other investors first.

Question 6

What is IRMAA and how do retirees avoid the Medicare surcharge?

Accepted Answer

IRMAA (Income-Related Monthly Adjustment Amount) is a surcharge on Medicare Part B and Part D premiums for retirees whose income exceeds a threshold, based on their tax return from two years earlier. A Roth conversion this year can raise your premium two years out. Retirees manage it by timing income and by appealing life-changing events with Form SSA-44.

Question 7

What is sequence of returns risk and how do you protect against it?

Accepted Answer

Sequence of returns risk is the danger that a market decline in your first retirement years, while you are withdrawing income, leaves lasting damage to your portfolio even if long-term average returns look fine. Two retirees with identical average returns can end up hundreds of thousands apart, based on which years the losses landed in.

Question 8

What is the difference between a retirement income planner and a financial advisor?

Accepted Answer

A financial advisor manages investments in most practices and offers retirement planning as one of several services. A retirement income planner specializes in the distribution phase: withdrawal sequencing, Roth conversion timing, Social Security claiming, and Medicare premium management. Many advisors list retirement income planning as a top service without deep specialization in it.

Question 9

When should each spouse claim Social Security?

Accepted Answer

There is no single best age for a couple. The higher earner’s decision matters most, since delaying to 70 raises both their own check and the survivor benefit the surviving spouse keeps for life. The lower earner can claim earlier, since spousal and survivor rules give that spouse protection a solo retiree does not have.

Question 10

When should you do Roth conversions before RMDs start?

Accepted Answer

The Roth conversion window opens the year your paycheck stops and closes when required minimum distributions begin at 73, or 75 if you were born in 1960 or later. Convert enough each year to fill a target tax bracket without spilling into the next one, then scale back once Social Security and RMDs start refilling your income on their own.

Question 11

Which retirement account should you withdraw from first?

Accepted Answer

No single account comes first every year. The conventional order, taxable brokerage, then tax-deferred, then Roth last, manages this year’s bracket but ignores the RMDs building behind it. A stronger approach blends withdrawals from all three accounts each year to fill your target bracket and preserve room for Roth conversions.

Retirement Income Answers