(This article by Kathie Rowell originally appeared in the September 2023 issue of Military Officer, a magazine available to all MOAA Premium and Life members. Learn more about the magazine here; learn more about joining MOAA here.)

From a distance, retirement beckons with dreams of limitless time to enjoy the good things in life, but the road to get there is full of hard decisions that can drastically affect the ultimate outcome.

Whether it’s concerns over finances or what to do with all that free time, these worries can be the stuff of nightmares for many pre-retirees as they plot their next steps toward retirement.

Financial Fear

Lila Quintiliani, MOAA program director, Financial and Benefits Education/Counseling, often counsels MOAA members approaching retirement. Among their most frequent concerns: health care, Social Security, and estate planning.

While these are separate issues, they all come back to one overall theme: finances.

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That’s why Quintiliani strongly suggests consulting with a fee-only financial planner to devise a strategy several years before retirement.

“It’s easy to save, right? You just put it on automatic. But it’s much harder to figure out the correct way to draw it down,” she said.

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“I like to call the five years before and after ultimate retirement the ‘retirement red zone,’” said Col. Michael Hunsberger, USAF (Ret), a MOAA member and owner of Next Mission Financial Planning. “This is the critical time where decisions can have outsized impact on your quality of life in retirement.”

Even if you don’t think you need ongoing help, Hunsberger said, hiring a financial adviser to do a one-time plan can be very useful. Ideally, this would happen about 10 years before retirement.

“A comprehensive financial planner is going to look at what your goals are and then seek to tailor your plan to meeting them,” he said. “They will typically look at your investments and retirement plans, tax situation, insurance, Social Security claiming strategy, long-term care plans, estate plans, and charitable or legacy goals at a minimum.”

Because many of the MOAA members who Quintiliani counsels are in their 60s, health care decisions are a frequent concern. While some are qualified to continue with military health insurance, most will move to Medicare at age 65.

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“Medicare is something that people kick down the road, and then suddenly they encounter it,” Quintiliani said.

At age 65, TRICARE For Life kicks in but only for those who have signed up for Medicare Part A and Medicare Part B. While Part A — hospital insurance — is free for most people, Part B — medical insurance — requires a premium that could result in monthly payments of $164.90 a month to $560.50 a month, depending on income as reported on tax returns from two years prior.

“That’s the thing that strikes people,” she said. “They find out that they should have planned a little better and that they should have a better retirement withdrawal plan.”

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A well-planned withdrawal strategy minimizes the risk of financial setbacks and reins in taxes.

Hunsberger said most people accumulate several different types of accounts — tax-free (Roth 401(k), individual retirement account, or Thrift Savings Plan); tax-deferred (traditional 401(k), individual retirement account, or Thrift Savings Plan); taxable accounts (brokerage account, savings account, certificates of deposit, etc.) — that are taxed differently.

“Building a plan for when you’ll tap each account, considering pension or annuity income, tax brackets, Social Security, and Medicare surcharges, as well as required minimum distributions from tax-deferred accounts, is important to minimize taxes,” he said. “A tax-smart plan can help you pay the minimum amount of taxes over your lifetime and not just in a single year. This plan should also balance your risk to help ensure that if the stock market hits a downturn, you don’t critically impact your plan.”

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Deciding when to file for Social Security is another major concern among those approaching retirement, Quintiliani said. The Social Security website can show personalized payment scenarios based on age at filing. Quintiliani suggests consulting a financial planner who can look at the big picture and devise a claiming strategy.

Sadly, she says, estate planning is sometimes neglected. It’s not unusual for her to speak with a survivor seeking information about the Survivor Benefit Plan, an annuity plan for dependents.

“You want to make sure you have things set out in a way that’s going to make it easy for your family and your loved ones to continue on,” she said. “Some folks are very organized, and they have it all laid out. Then I’ve talked to folks who don’t even know whether they signed up for the Survivor Benefit Plan or not. They’re going to leave their family in not such good straits.”

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Planning is the key, according to Quintiliani, and she can’t stress enough the importance of getting help with the intricate choices that lead to a satisfying retirement.

“A planner focuses on finances and planning full time, so they know and understand the rules and potential pitfalls,” Hunsberger said. “When you’re dealing with hundreds of thousands or even millions of dollars, a planner could easily have a six-figure impact over numerous years.”

The Intangible Fear

While retirement brings with it serious stress-inducing decisions and considerations, for those who have lived a life of service, it might also trigger an intangible fear: lack of purpose.

Former Air Force Tech. Sgt. Dr. Robert Doyle, a semiretired psychologist who spent about 25 years with John L. McClellan Memorial Veterans’ Hospital in Little Rock, Ark., said retirees often experience anxiety and/or depression and might benefit from enlisting a life coach to help with the transition.

“They need to maintain their lifestyle in terms of getting up and going to bed at the same time,” he said. “Their diet has to be the same, and they need to stay fit.”

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Doyle said a retirement that is fulfilling in the long term requires planning.

“You don’t retire from something,” he said. “You retire to something.” 

Kathie Rowell is a writer based in Louisiana.