THE RETIREE PENTATHLON

In my opinion, the preeminent health/longevity expert is Peter Attia. He has appeared on a number of the most popular podcasts and posts original content on The Drive, a blog and podcast. His work and content are, in part, the inspiration for this newsletter.

All of his work is based around framework thinking. He has developed a framework for diet, exercise, supplementation, daily habits, etc. and implements these in his own life and practice. Few individuals can compare when it comes to the breadth of experience and background. In the past, Attia earned an undergraduate degree in mechanical engineering and applied mathematics, attended Stanford University for medical school, spent five years as a resident at Johns Hopkins Hospital, and worked as a surgical oncology fellow with the NIH. In addition to an impressive and lengthy professional background, Attia is also a well-regarded endurance athlete, super car racing enthusiast, and archer.

All that to say, Peter Attia is an impressive individual! Now, his core focus is the science of longevity.

His framework for exercise is outlined in the Centenarian Olympics. It can be quickly summarized by the following two points:

1. The body, in most people, will fail before the other systems (brain, heart, etc.)

2. If I want to live to 100, what do I have to physically be able to do to be satisfied with my life?

The framework starts with a list of activities anyone would want to perform throughout retirement. For example, get off the floor without using one’s hands, pick up a 30 pound child, lift a suitcase over your head into an airplane’s luggage bin, or get out of a pool without a ladder.

By utilizing “backcasting,” a counterpart to forecasting popularized by the author/poker player Annie Duke, the longevity framework leads to a list of exercises to develop the competencies required to perform the previous list of activities at age 80 and beyond.

How could a comparable framework be applied to wealth in retirement? What do you want in retirement and what should you do today to prepare for that eventuality?

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Tax Strategies

There are three types of tax treatments for investment accounts: tax-deferred, taxable, and tax-free. Respectively, 401K/IRA, brokerage accounts, and Roth IRA/HSA (we will save details for another time). Many would recognize the “three bucket strategy.” Each of these accounts has a purpose in retirement.

Generally speaking, diversified retirement assets (in terms of tax treatment) will allow you to manage your income in retirement more effectively. As a retiree, there are a limited number of years left to pay taxes. These will be the most important tax years of one’s life.

There could be quite a bit of maneuvering to manage your tax burden. As is always the case with taxes, it is better to measure twice and cut once.

In the years leading up to retirement, it may be wise to touch base with a financial advisor to ensure that each bucket is filled to the proper level and prepared to withdraw funds in the correct amounts/sequence.

Estate Planning

One of, if not the, most important elements of an estate plan is the team behind the plan. A retiree should connect with a financial advisor, a tax preparer, and an estate attorney. These professionals will help to smoothly transition assets to the next generation. It is vitally important that each role in the process is filled by someone trustworthy and required to be a fiduciary.

You are the captain of this three person estate planning team, and they should act in your interests before their own. It may be wise to establish a trust which will allow for the efficient transfer of assets. You will decide what is put in the trust, who gets what, and how your assets will be distributed. The goal of an estate plan should be to distribute assets to individuals and/or organizations with as little confusion as possible.

By establishing a trust, you will be in the best possible position to accomplish this goal.

Travel

Travel is one of the most cited reasons/goals for retirement. It is one of the pinnacles of retired life to experience the enjoyment of travel when money, time, or other obligations previously held you back.

When thinking about travel in retirement, there will be some coordination with income and expenses in certain years. Although it may seem unnecessarily pragmatic, each trip must be supported by actual withdrawals from retirement accounts. Simply put, there will be some years where the lavish trip to Italy and Greece will be replaced by a more budget friendly alternative. In the end, seeing beautiful things and taking on new adventures will always be worthwhile.

Beyond the regular trips you take with your spouse, enjoy trips with your friends and family. Travel has a unique way of strengthening and deepening relationships.Consider creating a list of destinations you would like to visit in the future (and continue to travel often in the present, if possible) and earmark each destination as one for only you/your spouse or as one meant to be enjoyed with friends and family.

Communication with Family

Each family has different expectations when it comes to discussing finances. You should not feel the obligation to share every component of your financial life with your family. When communicating your expectations, start with the simple, less heavy items. It will be easiest to discuss items of this nature and may lay the groundwork for future, more involved conversations.

Also, it may be wise to have the same conversations with everyone who will be involved. Families can be complicated, and there may be specific circumstances that prevent you from sharing everything with everyone. This is entirely understandable. That being said, it is easy to create unnecessary conflict by excluding certain details from some and sharing everything with others.

Always use discretion but share to the point where everyone can easily understand your goals and wishes.

Planned Giving

If you are closely tied to a charitable organization, community group, and/or church, giving will likely play a significant role in retirement.

If any of your retirement assets are held in an IRA, you should be eligible to make qualified charitable distributions (QCDs). A QCD is a transfer of funds directly from the IRA custodian to a qualified charity. As long as specific rules are met, a QCD can also satisfy the required minimum distributions (RMDs). The donated amount will entirely avoid income taxes which is a win for you and the recipient.You may be able to reduce your tax bill by “bunching” charitable gifts into one tax year. By doing so, you may cause itemized deductions to exceed the standard deduction threshold. Typically, taxpayers will bunch in this way when donating appreciated securities.

Not only can giving be a worthwhile financial activity, it can contribute positively to one’s mental health and life generally. Retirement has its own unique challenges. Planned, intentional giving can counteract many of the downsides. As the saying goes, “It is better to give than to receive.”

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There is no need to worry about life after retirement. By taking a few simple steps before this much anticipated stage of life actually arrives, it is much easier to live a fulfilled and enjoyable life throughout retirement.

By using backcasting and creating health/wellness goals with intentionality, one can expect to do many or all of the things they love and enjoy late into life.

Wealth is no different. The same approach shows that preparation and intentional planning is the key to living well in retirement.

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Maybe this should be titled "The Retiree Decathlon." Please hit 'Reply' and tell me other steps that you believe are important in retirement planning and what you are doing to backcast/prepare today.