A View From the Top

Dan Kresh |

You did it! After a career of hard work, and decades of saving, you have accumulated a nest egg. Now, your time is yours! You don’t need to spend more of it earning income, you’ve done that part so now it’s time to reap the rewards.

Not so fast.

Retirement planning is a lot like summiting a mountain. The first part is an uphill climb against gravity, the second part is navigating down carefully when you’re tired and avoiding a fall. Reaching the summit is an incredible achievement, and you should be proud, but you still must safely navigate the way down.

“Climbing down steep rock is usually harder than going up, because of the difficulty in seeing holds from above and the normal reluctance of climbers to reach down and work their hands low enough as they descend.[i]” 

Don’t mistake knowing how to save for retirement with knowing how to make your nest egg last, the way down might be harder to see, there’s never been a greater height to fall from and you’re doing it when you’re already exhausted.

You do not pay your bills in retirement with the balances in your accounts. You pay your bills with your after-tax money.

Like summiting a mountain and then safely descending, saving for retirement, and living off a nest egg come with slightly different challenges.

When it comes to paying your bills, the amount of money you can net after-taxes is more important than the balance in the accounts, but you don’t see that on any statements. Not only that, but future tax laws can impact this hugely, and future tax laws have proven to be unpredictable.

From the summit, you will be able to take it all in with the most information you will ever have about the conditions of the descent. This is when tweaks to the plan can best manage the current risks. A plan to fund retirement, or descend a mountain, should have some flexibility built into it with multiple possible routes so you have options if the conditions at the top are not what you expected.

If you made it to retirement with a nest egg that can support you, you’ve probably heard about the benefits of diversification. You want resilience in your portfolio when it’s growing but especially when you’re depending on it.  Tax laws can and do change, and that’s why tax diversification can be just as important as investment diversification. Having multiple sources of funds, or multiple types of accounts with different tax treatment leaves you with more optionality, which could end up being crucial.

In retirement, navigating when and where to draw from carefully and thoughtfully is the only way to prevent slips and falls. This requires an understanding of not only your specific circumstances but whatever the then-current tax laws will be, and it can make a huge difference with the stability and longevity of that nest egg.

There’s good news though, a sherpa needs to be with you on the whole journey, if you suddenly realize you need one when you get to the top, tough luck! A financial planner meets you where you are and then navigates from there, regardless of where you are on the mountain and which direction you’re going.

So always remember, belay but don’t delay planning your distribution strategy.

And don’t forget to take a deep breath and appreciate the view.


Diversification does not assure a profit or protect against loss in declining markets, and diversification cannot guarantee that any objective or goal will be achieved.

Photo by garrett parker on Unsplash (Description: landscape photo of a mountain range reflected in a lake at sunset)