5 Smart Moves to Make with $3 Million Before You Retire at 60

Reaching age 60 with $3 million saved is an outstanding achievement. That savings didn't happen by luck, it took years of discipline, smart habits, and tough choices. But having a $3 million nest egg doesn't automatically guarantee the retirement you've dreamed about. It takes careful retirement planning to make sure you don't fall victim to underspending, an excessive tax bill, or worse, running out of money when you need it most.

Kyle Hammerschmidt, founder of MOKAN Wealth, teaches a proven five-step retirement planning process for self-made 401k and IRA millionaires. This process helps you turn your hard-earned savings into a strategy you can rely on for life. The goal is simple: Retire on your terms, enjoying your freedom without worry.

Here’s an overview of the five steps:

1. Income Plan: Create a sustainable paycheck for your entire retirement.
2. Tax Plan: Minimize the taxes you pay—both now and over your lifetime.
3. Investment Plan: Build a portfolio that matches your goals and future needs.
4. Healthcare Plan: Prepare for rising healthcare costs and surprises.
5. Legacy Plan: Make sure your loved ones and causes, not the IRS, benefit from your life's work.

These steps work together to give you a “retirement paycheck system” built for real life, not just spreadsheets. Here’s how to put them into action.

https://www.youtube.com/watch?v=XfBHIaPaSY4

Step 1: Build Your Income Plan for a Worry-Free Retirement Paycheck

Once you cross into retirement territory, the game changes. You’re no longer growing your accounts with regular paychecks and dollar-cost averaging. Instead, you’re in “reverse dollar cost averaging” living off your savings. Now, every dollar withdrawn matters.

Run the Cash Flow Math

Start with a clear comparison between your current spending and what you expect in retirement. Always factor in inflation. If you spend $144,000 a year now, at 4% inflation, that likely becomes about $288,000 by your late 70s.

Break down your expenses into two simple lists:

• Essentials: Housing, food, insurance, utilities costs that won’t go away as long as you (and your spouse) live.
• Non-essentials: Travel, hobbies, gifts these often change or may even drop in later years.

If you’re still working, look at your current net monthly deposits. This can help you target a retirement lifestyle that feels familiar.

Test Withdrawal Order Scenarios

The order in which you tap accounts: IRAs, brokerage, Roth is a major decision. Each comes with different tax and Medicare impacts that ripple through the rest of your plan. What looks smart on paper can soon get expensive if it triggers higher taxes or healthcare costs.

This isn’t just math in a spreadsheet. It’s real financial security for the life you want.

Time Your Social Security Claim Wisely

When to claim Social Security is one of the biggest retirement decisions. Delay until age 70 and you’ll get about 132% of your full benefit. Claim at 62 and it’s about 75%. Waiting for a bigger check often means relying on your investments more in the early years.

Here’s how it breaks down:

• Claim early: Lower monthly Social Security, but you won’t have to pull as much from investments.
• Delay to 70:** Larger monthly check, but your investments do the heavy lifting for longer.

Bigger checks aren’t always better. The right answer depends on your full financial plan and personal peace of mind.

Choose Your Withdrawal Strategy

Many retirees use the old “4% rule.” But these days, more people are using “guardrail” strategies. When the markets are strong, you spend more. If markets drop, you tighten your belt until things recover.

The key: Know exactly how much you can spend, safely, without guessing.

This gives you a predictable retirement paycheck, takes the anxiety out of spending, and helps avoid the two biggest mistakes, spending too little, or running out late in life.

Most clients want to spend enough to enjoy life, but also avoid leaving behind a huge unspent pile—or worse, end up broke.

Step 2: Craft a Tax Plan to Keep More of Your Money from Uncle Sam

Taxes don’t go away when you retire. In fact, for high-balance 401k and IRA savers, taxes can be your largest expense, often beating out housing or healthcare by a mile.

It’s time to focus less on “return on your money,” and more on return of your money. Many large financial firms skip this step, talking only about investments while ignoring retirement tax planning.

Avoid any advisor who overlooks taxes. Unless you like leaving a tip to the IRS, tax planning is essential.

Seize the Roth Conversion Opportunity

In 2017, Congress gave retirees a rare tax gift: lower tax rates, thanks to the Tax Cuts and Jobs Act. These rates have created a second window that’s expected to last through 2025. Many missed the first chance at big tax savings out of hesitation, delay, or simply not knowing.

If most of your retirement money is still in pre-tax accounts, there’s never been a better time to “tax diversify” by shifting funds to Roth accounts. Tax rules can change quickly depending on elections and new laws, so it’s smart to take action while rates are still low.

Timing matters, waiting could cost you six figures or more.

The IRS gets the final say if you wait too long, often through required minimum distributions (RMDs) at age 73 or 75. Delays limit your choices and can dramatically raise the lifetime taxes you (or your heirs) pay.

Avoid the Seven Big Tax Surprises

For a quick scan, here are the seven most common, and costly, tax surprises in retirement:

1. Not all income is taxed the same way. Social Security, pensions, and IRA withdrawals all have different rules.
2. RMDs are forced withdrawals—take money out (and face a tax bill) even if you don’t need it.
3. Tax rates may rise. Today’s low-tax window won’t last forever.
4. Inheritance taxes hit hard. Heirs often pay high taxes when draining inherited retirement accounts.
5. Income from tax-deferred accounts raises Medicare premiums and Social Security taxes.
6. Lack of tax diversification forces you to pull from taxable accounts when the market is down.
7. Old withdrawal rules don’t reflect today’s realities. Don’t rely on 1990s advice.

Converting to Roth now, paying some taxes upfront, while rates are low can make a huge long-term difference. Don’t let the old “I’ll be in a lower bracket in retirement” myth trick you into giving up control.

Tax diversification is your best tool against government surprises in retirement.

Step 3: Design an Investment Plan That Protects Your Future

Seeing $3 million in an account balance is comforting, but that’s only the tip of the iceberg. Retirement planning demands you look below the surface at risks like taxes, inflation, healthcare costs, and market drops.

Great retirement investing is built on purpose, not performance alone. Too many people (and advisors) chase returns, rebalance quarterly, and fill out “risk tolerance” quizzes without a plan. But as your wealth grows, investing should actually get simpler—planning is where things get complex.

Don’t hire an investment manager when you really need a long-term planner.

Avoid Cookie-Cutter Allocations

Many advisors put retirees into the same prebuilt formula, 60/40 stocks to bonds or some target-date fund. It treats everyone like they have the same goals and risks. You deserve more.

Create Your War Chest Buffer

Set aside three to five years of retirement income in stable, reliable assets. This “war chest” can be U.S. Treasuries, CDs, or high-quality bonds.

For example: If you’ll need $150,000 a year for the first six years of retirement, set aside $900,000 in lower-risk holdings. This shields you from “sequence of returns risk”, the danger that a market crash early in retirement forces you to sell low and lose out later.

Align the Rest for Long-Term Growth

The rest of your portfolio—beyond the war chest—should be invested for growth. But don’t leave it to guesswork. Calculate your minimum required rate of return (maybe 6%) and an acceptable standard deviation (volatility, maybe 12%). That means you expect, within a 95% window, a range of about -18% to +30%.

Simple explanation: Your portfolio targets 6% growth with a known level of risk. No quizzes. No guesswork.

Here’s what you gain:

• A clear buffer to help you sleep at night
• Growth aligned with your actual goals
• Fewer surprises and less second-guessing

Your investment plan should start with your income, tax, and healthcare needs. Only then should you pick funds or managers. Don’t fall for a generic approach.

Step 4: Plan for Healthcare Costs Before They Derail You

Healthcare is the wild card in retirement planning—the one expense that can wreck even the best-laid financial plans.

Bridge the Gap Before Medicare at 65

Retiring before age 65 means you’ll need coverage before Medicare starts. Your options might include:

• COBRA: Extend your old employer insurance (you can use IRA or 401k withdrawals to pay for it).
• ACA Marketplace plans: These often base premiums on income, not assets, and careful withdrawal planning can lower costs.
• Health Savings Accounts (HSAs): Max out contributions if you can, and use those dollars tax-free to cover current or future medical bills.

Plan now, waiting until the last minute can cost you big.

Navigate Medicare and IRMAA at 65+

Once you hit 65, Medicare kicks in. With $3 million saved, extra premiums—called IRMAA surcharges—are likely. Planning withdrawals, Roth conversions, and asset locations now can reduce or delay these charges.

Tackle Long-Term Care – The Elephant in the Room

Few retirees want to face the risk of extended care needs, but planning now avoids chaos later. You have three main choices:

• Self-insure: Set aside enough to cover future care costs; this must be separate from regular retirement savings.
• Traditional long-term care insurance: Pay annual premiums for possible coverage.
• Hybrid life policy with long-term care: Combines life insurance and a long-term care rider.

Long-term care insurance makes the most sense if you have assets to protect. If you plan to self-insure, make sure the money is earmarked so you know it’s there when needed.

Step 5: Secure Your Legacy to Protect Family and Wealth

Legacy planning isn’t reserved for billionaires. With $3 million, you owe it to loved ones and your causes to set up a clear, tax-smart plan.

Build a Surviving Spouse Plan if Married

When one spouse passes away, the survivor’s taxes often spike. One Social Security check vanishes, tax brackets shrink, but costs like housing stay steady or barely dip.

Here’s what you can do:

• Consider life insurance or Roth conversions while both spouses are alive to soften the blow of what’s called a “tax time bomb.”
• Talk through what happens if one of you passes away tomorrow, most couples avoid this, only to leave the survivor with unpleasant tax and income surprises.

Most haven’t discussed this, and the surviving spouse is often shocked by the tax hit.

Handle Inherited IRAs for Singles or After Both Spouses Pass

If you’re single (or when both spouses have passed), inherited IRAs carry even more risk. Secure Act 2.0 requires heirs to empty those accounts in just 10 years, often during their highest-earning years and highest tax brackets.

Update Essential Estate Documents

A checklist of basics to protect your money and make life easier for your family:

• An updated will reflecting your latest wishes
• Durable power of attorney for finances and one for healthcare
• A revocable living trust to avoid probate and keep matters private
• Correct beneficiary designations on all accounts (these override your will)

Unnecessary taxes should never be your legacy. Well-drafted documents and smart tax moves can make all the difference.

Coordinate All Five Steps for Retirement Success

Your retirement success doesn’t just hinge on investments. It depends on keeping all five steps coordinated:

1. Income: Build a predictable, flexible paycheck that feels just right.
2. Tax: Cut your lifetime bill with smart, timely moves.
3. Investment: Let your portfolio support the life you want—not the other way around.
4. Healthcare: Be ready for rising costs and surprises like IRMAA.
5. Legacy: Protect your loved ones from extra taxes and confusion.

These steps form what Kyle calls the “Five C System,” combining cash flow, control, confidence, clarity, and community. They turn a big dollar balance into a real-life retirement you can look forward to each day.

Retirement is about more than a big account balance. It’s about having a plan that lets you enjoy what you worked so hard to build on your terms.

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