What That New Tax Bill Really Means for Your Retirement, Ep 189

Most people nearing retirement aren’t thinking about tax legislation; they’re focused on their savings, Social Security timing, or making sure their lifestyle doesn’t outlive their money. But what if a single bill quietly reshapes the rules you’ve been planning around? In this episode, I break down a new piece of legislation that’s generating significant political buzz but concealing some far-reaching implications for retirees and pre-retirees alike. If you’ve heard soundbites about “the biggest tax cut in history,” you might assume you’re in for a windfall. The truth? It’s a lot more nuanced and more temporary than headlines let on.

I walk you through what’s actually in the bill, what got stripped out (spoiler: Social Security tax relief didn’t make the cut), and how all this might hit people aged 55 to 70. Then, in classic Retirement Made Easy fashion, I pivot to listener questions on how to tap your accounts in the smartest order, why RMD math isn’t as harsh as people think, and whether borrowing against your house in a downturn is ever a good idea. I close with a sobering but motivating list of what can go wrong in retirement planning and how to think more clearly and conservatively about your future.

You will want to hear this episode if you are interested in...

  • (00:00) Intro
  • (04:19) Key changes in the bill that might affect retirees
  • (13:08) Listener Q1: Which retirement accounts to tap first?
  • (19:58) Listener Q2: Clearing up RMD confusion
  • (23:03) Listener Q3: Is using home equity a good backup plan?
  • (27:06) Listener Q4: What could blow up your retirement plan?

Understand what the new tax bill actually does (and doesn’t)

There’s a lot of noise about this so-called “once-in-a-generation” tax bill, but most of it misses the mark. I broke it down to what matters for people like you: pre-retirees and early retirees. Despite the headlines, there’s no relief on Social Security taxes in the version that passed the House. What is included?

A standard deduction bump, some targeted relief for certain auto and charitable expenses, and a sizable expansion of HSA contribution limits, though most of it sunsets by 2028. This isn’t sweeping reform; it’s mostly a temporary patch with income-based caveats. Don’t fall for the hype, read the fine print, or let someone who has read it walk you through it.

Choose a smarter drawdown strategy than the old-school rules

The “spend taxable first, pre-tax second, Roth last” model is outdated. I explained how a customized withdrawal strategy, built around your income levels, account mix, and tax brackets, can make a huge difference over time. I’m talking real dollars: tens of thousands saved in taxes and potentially hundreds of thousands left over for your heirs.

By mapping out different withdrawal orders and comparing the long-term outcomes, you can avoid paying more than you need to and stretch your retirement savings further. The key is knowing your buckets, Roth, pre-tax, and brokerage, and using them intentionally, not by default.

Don’t ignore the risks that quietly wreck retirements

When people ask me, “What could go wrong with our plan?”, they’re expecting stock market volatility or health emergencies, and yes, those matter. But the biggest threats are often more subtle: underestimating expenses, overestimating investment returns, ignoring tax impact, or banking on pensions that don’t last. That’s why I stress stress-testing your retirement plan.

It’s not about predicting everything, it’s about being flexible, conservative, and prepared. Inflation, healthcare costs, lifestyle creep, and even one spouse passing away early, all of these can throw your numbers off. Your job now is to spot these cracks before they widen.

 

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