✨ A $2 Million IRA ≠ a $2 Million retirement! ✨
Seeing $2,000,000 on a retirement statement can create a tremendous sense of security.
But the number on the statement isn't necessarily the number you get to spend 💡
For affluent retirees, I believe there are three risks that deserve far more attention:
1️⃣ Sequence of Returns Risk
Imagine retiring with $2 million just before a significant market decline.
You're no longer simply waiting for the market to recover—you may also be withdrawing $80,000, $100,000 or more each year to fund your lifestyle.
Those withdrawals during a declining market can permanently reduce the capital available to participate in the recovery.
Same average return.
Different sequence.
Potentially VERY different retirement outcome.
2️⃣ Withdrawal Rate Risk
A $2 million portfolio supporting $80,000 annually is very different from one supporting $150,000.
Retirement planning isn't simply about reaching a certain asset level.
It's about determining how much sustainable income those assets can produce—and how that income changes during difficult markets.
3️⃣ The IRS May Be Your Silent Partner
If that $2 million is primarily in traditional IRAs and 401(k)s, it represents pre-tax wealth—not necessarily spendable wealth.
Eventually, Required Minimum Distributions (RMDs) enter the picture.
And larger taxable distributions can potentially create a ripple effect:
→ Higher taxable income
→ Higher Medicare premiums through IRMAA
→ More Social Security benefits potentially subject to taxation
→ Less flexibility over when and how you recognize income
This is why sophisticated retirement planning should begin well BEFORE RMDs.
Could strategic Roth conversions make sense?
Should withdrawals come from taxable, tax-deferred or Roth accounts first?
Should you maintain a cash or short-term reserve to avoid selling equities during a downturn?
Could charitable giving strategies help manage future RMDs?
These aren't simply investment questions.
They're retirement income and tax-planning questions.
The goal shouldn't just be:
“Retire with $2 million.”
The better goal is:
Build a portfolio capable of generating the after-tax income you need, for as long as you need it, while maintaining flexibility through different market and tax environments.
Because ultimately, wealth isn't measured solely by your account balance.
It's measured by what that balance allows you to do.
Shanell Foster, MBA
Financial Advisor ⛳
Wellington Way Financial Group of Thrivent
Appointment Link: calendly.com/shanellfoster
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Forecaddie, Patrick
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