Eight Tips From a Financial Caddie: How to Keep Your Retirement on the Fairway

I didn’t expect an epiphany when I attended the Farmers Insurance Open at Torrey Pines Golf Course in San Diego earlier this year, yet that is what I got.

And it wasn’t professional golfers who led me to this illuminating moment. It was the caddies.

People often think of caddies as simply the people who carry the golf clubs, but they are so much more. I was able to stand close enough to golfers and caddies at Torrey Pines to see their relationship in action.

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These caddies know the course well. They point out the danger zones and the safe places to hit. They know the slopes of the greens and where the bunkers are. In other words, the caddie’s knowledge helps keep the golfer out of trouble.

The Kiplinger Building Wealth program handpicks financial advisers and business owners from around the world to share retirement, estate planning and tax strategies to preserve and grow your wealth. These experts, who never pay for inclusion on the site, include professional wealth managers, fiduciary financial planners, CPAs and lawyers. Most of them have certifications including CFP®, ChFC®, IAR, AIF®, CDFA® and more, and their stellar records can be checked through the SEC or FINRA.

As I watched caddies offer their advice, it occurred to me that this is similar to the relationship between financial professionals and our clients. We study the course (the markets and the investment options) and recommend approaches that fit the moment.

With that in mind, let’s take a look at a few of the traps you might face with your retirement savings and what to do to improve your chances of landing nicely on the green.

As your financial caddie, there are eight factors I think you should consider.

Factor No. 1: Risk

Investing comes with risks, but are you taking the right amount of risk for your personal situation? A lot goes into deciding that. If you are in or near retirement, you want to be careful that you haven’t taken on so much risk that a down market could torpedo your retirement plans.

If you are too conservative with your investments, you run the risk of inflation eating away at your savings. It is essential to make sure the amount of risk you take is the correct amount for your situation.

Ideally, you want a percentage of your investments to be in safer assets while keeping some of your money invested aggressively.

Factor No. 2: Taxation

Among the things you won’t escape in retirement is income tax. Even a portion of your Social Security benefit can be taxed depending on your overall income. But there’s no need to pay more than you owe, so make sure your finances are structured in a tax-efficient manner.

Here is just one example: The order in which you withdraw money from accounts can make a difference. You should start with taxable accounts, then tax-deferred accounts and finally tax-free accounts, such as a Roth IRA.

Factor No. 3: Internal costs

Many people are unaware that there are fees associated with their investments. Just as an example, mutual funds and exchange-traded funds (ETFs) typically have an annual management fee that is a percentage of the fund’s value.

You might also pay a fee at the time you buy or sell one of these funds. It’s important to know what fees you are paying and how much, so you can make the best decisions about your investments.

Factor No. 4: Roth conversions

Many people save for retirement through tax-deferred accounts, such as a traditional IRA or 401(k). This means you avoid, for now, paying taxes on the income you contribute to those accounts.

But when you begin using that money in retirement, your withdrawals will be taxed.

Also, starting when you are 73 (or 75 if born in 1960 or later), the federal government will require you to withdraw a certain percentage each year so the IRS can collect the tax.

This is why owners of tax-deferred accounts should consider a Roth conversion. A Roth IRA grows tax-free, and you don’t pay taxes when you withdraw money in retirement.

Also, you aren’t subject to those required minimum distributions (RMDs) when you turn 73. You do pay taxes during the conversion as you move money from your tax-deferred account to the Roth, but your money then continues to grow tax-free.

Factor No. 5: Income plan

In retirement, you no longer receive the regular paycheck that helped you pay bills and gave you money for weekend excursions and other fun activities.

To replace the paycheck, you need an income plan that will keep money flowing in regularly.

Social Security will provide part of that income, and a pension, if you have one, could add to it. But you may need more to come close to replacing the amount of your paycheck.

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One option is to make withdrawals from your IRA, 401(k) or other retirement savings account, but you should be careful about the amounts of those withdrawals so that you don’t run out of money.

The general guideline used to be to withdraw 4% annually, but you may want to go with a little less or a little more than that, depending on your situation and your needs.

Another option is to purchase an annuity that can create a monthly payment for you for the rest of your life. A financial professional (your caddie) can assist in creating the income plan.

Factor No. 6: Long-term care plan

This is not something most of us like to think about, but there’s a good chance that either you or your spouse will require long-term care at some point. And that care is pricey.

If the need arises, it’s important to have a plan in place to pay for care. There are several strategies you can use.

For example, long-term care insurance policies will cover the cost of care services, including nursing homes and assisted-living facilities.

Another option is to self-fund by designating a portion of your personal savings to pay for long-term care.

The different approaches you can take to pay for this expense come with pros and cons, so you should weigh all the facts carefully.

Factor No. 7: Wealth transfer

What will happen with your money once you are gone? To make sure your assets go to the people or charities you prefer, be sure to have a will and possibly a trust in place.

You can also take steps to reduce the tax burden on your heirs when you are passing on wealth.

For example, by having money in a Roth IRA rather than a traditional IRA, your beneficiaries won’t have to pay income taxes on that amount as long as the account has been open for at least five years.

Also, you might consider giving some of your money as gifts to your heirs while you are still alive. In 2025, you and your spouse are each allowed to give up to $18,000 a year per recipient before gift taxes come into play.

Those are just a couple of ways you could reduce the tax bill as you make the wealth transfer.

Factor No. 8: Identity theft

This is a growing problem. Retirees are often targets of identity theft because, among other reasons, many of them have a lot of money in savings, which is tempting to thieves.

Retirees may also have their assets spread across several accounts but may not be checking those as often as they should to catch anything unusual.

To combat these thieves, you need to have secure passwords, monitor your accounts regularly and be wary of unexpected emails or phone calls from scammers pretending to be someone else.

As you can see, with finances as with golf, there are hazards that can upend your plans if you’re not careful. This is where help comes in.

A good financial professional, like a savvy caddie, can explain the lay of the course and advise you on where the trouble areas lie.

Then, using that advice, you can make decisions more confidently and with a stronger grip on the information that can help you achieve your retirement dreams.

Ronnie Blair contributed to this article.

The appearances in Kiplinger were obtained through a PR program. The columnist received assistance from a public relations firm in preparing this piece for submission to Kiplinger.com. Kiplinger was not compensated in any way.

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